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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period EndedJuneSeptember 30, 2020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from_______________________to_______________________
Commission File No.1-32525
AMERIPRISE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3180631
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1099 Ameriprise Financial CenterMinneapolisMinnesota55474
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:(612)671-3131
Former name, former address and former fiscal year, if changed since last report:Not Applicable
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol Name of each exchange on which registered
Common Stock (par value $.01 per share)AMPNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes☒No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes☒No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒Accelerated Filer☐Non-accelerated Filer☐
Smaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes☐No☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class Outstanding at July 29,October 30, 2020
Common Stock (par value $.01 per share)120,268,867117,977,834 shares

AMERIPRISE FINANCIAL, INC.
FORM 10-Q
INDEX 
Part I. Financial InformationPart I. Financial InformationPart I. Financial Information
Item 1. Financial Statements (Unaudited)Item 1. Financial Statements (Unaudited)Item 1. Financial Statements (Unaudited)
Consolidated Statements of Operations — Three months and six months ended June 30, 2020 and 2019
3
Consolidated Statements of Operations — Three months and nine months ended September 30, 2020 and 2019
3
Consolidated Statements of Comprehensive Income — Three months and six months ended June 30, 2020 and 2019
4
Consolidated Statements of Comprehensive Income — Three months and nine months ended September 30, 2020 and 2019
4
Consolidated Balance Sheets — June 30, 2020 and December 31, 2019
5
Consolidated Balance Sheets — September 30, 2020 and December 31, 2019
5
Consolidated Statements of Equity — Three months and six months ended June 30, 2020 and 2019
6
Consolidated Statements of Equity — Three months and nine months ended September 30, 2020 and 2019
6
Consolidated Statements of Cash Flows — Six months ended June 30, 2020 and 2019
7
Consolidated Statements of Cash Flows — Nine months ended September 30, 2020 and 2019
7
Notes to Consolidated Financial StatementsNotes to Consolidated Financial Statements
1.Basis of Presentation
9
1.Basis of Presentation
9
2.Summary of Significant Accounting Policies
9
2.Summary of Significant Accounting Policies
9
3.Recent Accounting Pronouncements
12
3.Recent Accounting Pronouncements
13
4.Revenue from Contracts with Customers
15
4.Revenue from Contracts with Customers
16
5.Variable Interest Entities
20
5.Variable Interest Entities
21
6.Investments
25
6.Investments
26
7.Financing Receivables
29
7.Financing Receivables
30
8.Deferred Acquisition Costs and Deferred Sales Inducement Costs
32
8.Deferred Acquisition Costs and Deferred Sales Inducement Costs
33
9.Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities
33
9.Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities
34
10.Variable Annuity and Insurance Guarantees
34
10.Variable Annuity and Insurance Guarantees
35
11.Debt
35
11.Debt
36
12.Fair Values of Assets and Liabilities
36
12.Fair Values of Assets and Liabilities
37
13.Offsetting Assets and Liabilities
47
13.Offsetting Assets and Liabilities
48
14.Derivatives and Hedging Activities
49
14.Derivatives and Hedging Activities
50
15.Shareholders’ Equity
53
15.Shareholders’ Equity
54
16.Income Taxes
55
16.Income Taxes
56
17.Contingencies
56
17.Contingencies
57
18.Earnings per Share
57
18.Earnings per Share
58
19.Segment Information
58
19.Segment Information
59
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsItem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
60
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
61
Item 3. Quantitative and Qualitative Disclosures About Market RiskItem 3. Quantitative and Qualitative Disclosures About Market Risk
95
Item 3. Quantitative and Qualitative Disclosures About Market Risk
95
Item 4. Controls and ProceduresItem 4. Controls and Procedures
95
Item 4. Controls and Procedures
95
Part II. Other InformationPart II. Other Information
96
Part II. Other Information
96
Item 1. Legal ProceedingsItem 1. Legal Proceedings
96
Item 1. Legal Proceedings
96
Item 1A. Risk FactorsItem 1A. Risk Factors
96
Item 1A. Risk Factors
96
Item 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
97
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
97
Item 6. ExhibitsItem 6. Exhibits
98
Item 6. Exhibits
98
SignaturesSignatures
99
Signatures
99
2
AMERIPRISE FINANCIAL, INC.
PART I. FINANCIAL INFORMATION 
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(in millions, except per share amounts) 
Revenues
Management and financial advice fees$1,702  $1,732  $3,472  $3,359  
Distribution fees375  490  839  970  
Net investment income305  368  633  765  
Premiums78  376  169  747  
Other revenues270  316  643  594  
Total revenues2,730  3,282  5,756  6,435  
Banking and deposit interest expense18  37  43  72  
Total net revenues2,712  3,245  5,713  6,363  
Expenses
Distribution expenses940  948  1,935  1,848  
Interest credited to fixed accounts262  186  353  390  
Benefits, claims, losses and settlement expenses1,467  584  (280) 1,254  
Amortization of deferred acquisition costs(248) 58  264  74  
Interest and debt expense41  59  87  112  
General and administrative expense776  823  1,529  1,628  
Total expenses3,238  2,658  3,888  5,306  
Pretax income (loss)(526) 587  1,825  1,057  
Income tax provision13  95  328  170  
Net income (loss)$(539) $492  $1,497  $887  
Earnings per share
Basic$(4.31) $3.61  $11.91  $6.46  
Diluted$(4.31) $3.57  $11.77  $6.38  

 Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in millions, except per share amounts) 
Revenues
Management and financial advice fees$1,893 $1,794 $5,365 $5,153 
Distribution fees400 480 1,239 1,450 
Net investment income300 356 933 1,121 
Premiums80 374 249 1,121 
Other revenues340 347 983 941 
Total revenues3,013 3,351 8,769 9,786 
Banking and deposit interest expense10 34 53 106 
Total net revenues3,003 3,317 8,716 9,680 
Expenses
Distribution expenses1,028 971 2,963 2,819 
Interest credited to fixed accounts170 127 523 517 
Benefits, claims, losses and settlement expenses1,104 594 824 1,848 
Amortization of deferred acquisition costs85 112 349 186 
Interest and debt expense37 52 124 164 
General and administrative expense763 820 2,292 2,448 
Total expenses3,187 2,676 7,075 7,982 
Pretax income (loss)(184)641 1,641 1,698 
Income tax provision (benefit)(44)98 284 268 
Net income (loss)$(140)$543 $1,357 $1,430 
Earnings per share
Basic$(1.14)$4.09 $10.87 $10.53 
Diluted$(1.14)$4.04 $10.73 $10.40 
See Notes to Consolidated Financial Statements.
3
AMERIPRISE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(in millions) 
Net income (loss)$(539) $492  $1,497  $887  
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(8) (14) (41) (9) 
Net unrealized gains (losses) on securities697  248  173  570  
Net unrealized gains (losses) on derivatives—  —  —  (1) 
Total other comprehensive income (loss), net of tax689  234  132  560  
Total comprehensive income$150  $726  $1,629  $1,447  

 Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in millions) 
Net income (loss)$(140)$543 $1,357 $1,430 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment27 (22)(14)(31)
Net unrealized gains (losses) on securities95 90 268 660 
Net unrealized gains (losses) on derivatives— — — (1)
Total other comprehensive income (loss), net of tax122 68 254 628 
Total comprehensive income (loss)$(18)$611 $1,611 $2,058 
See Notes to Consolidated Financial Statements.
4
AMERIPRISE FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 June 30, 2020December 31, 2019
(in millions, except share amounts)
Assets
Cash and cash equivalents$7,654  $3,709  
Cash of consolidated investment entities49  118  
Investments (net of allowance for credit losses: 2020, $56; 2019, $24(1) )
39,208  37,915  
Investments of consolidated investment entities, at fair value1,495  1,606  
Separate account assets83,698  87,488  
Receivables (net of allowance for credit losses: 2020, $47; 2019, $39)7,275  7,202  
Receivables of consolidated investment entities, at fair value20  8  
Deferred acquisition costs2,499  2,698  
Restricted and segregated cash, cash equivalents and investments2,416  2,386  
Other assets10,588  8,698  
Total assets$154,902  $151,828  
Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims$33,312  $30,512  
Separate account liabilities83,698  87,488  
Customer deposits16,070  14,430  
Short-term borrowings200  201  
Long-term debt2,835  3,097  
Debt of consolidated investment entities, at fair value1,489  1,628  
Accounts payable and accrued expenses1,650  1,884  
Other liabilities9,090  6,775  
Other liabilities of consolidated investment entities, at fair value58  84  
Total liabilities148,402  146,099  
Equity:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 331,201,657 and 329,842,827, respectively)3  3  
Additional paid-in capital8,622  8,461  
Retained earnings15,510  14,279  
Treasury shares, at cost (210,594,156 and 205,903,593 shares, respectively)(18,029) (17,276) 
Accumulated other comprehensive income (loss), net of tax394  262  
Total equity6,500  5,729  
Total liabilities and equity$154,902  $151,828  

 September 30, 2020December 31, 2019
(in millions, except share amounts)
Assets
Cash and cash equivalents$7,441 $3,709 
Cash of consolidated investment entities227 118 
Investments (net of allowance for credit losses: 2020, $56; 2019, $24(1) )
40,737 37,915 
Investments of consolidated investment entities, at fair value1,903 1,606 
Separate account assets86,128 87,488 
Receivables (net of allowance for credit losses: 2020, $46; 2019, $39)7,383 7,202 
Receivables of consolidated investment entities, at fair value9 8 
Deferred acquisition costs2,450 2,698 
Restricted and segregated cash, cash equivalents and investments2,551 2,386 
Other assets9,858 8,698 
Total assets$158,687 $151,828 
Liabilities and Equity
Liabilities:
Policyholder account balances, future policy benefits and claims$34,020 $30,512 
Separate account liabilities86,128 87,488 
Customer deposits16,818 14,430 
Short-term borrowings200 201 
Long-term debt2,833 3,097 
Debt of consolidated investment entities, at fair value1,901 1,628 
Accounts payable and accrued expenses1,770 1,884 
Other liabilities8,730 6,775 
Other liabilities of consolidated investment entities, at fair value220 84 
Total liabilities152,620 146,099 
Equity:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 331,440,683 and 329,842,827, respectively)3 3 
Additional paid-in capital8,677 8,461 
Retained earnings15,241 14,279 
Treasury shares, at cost (212,809,074 and 205,903,593 shares, respectively)(18,370)(17,276)
Accumulated other comprehensive income (loss), net of tax516 262 
Total equity6,067 5,729 
Total liabilities and equity$158,687 $151,828 
(1) Prior to January 1, 2020, the allowance for credit losses is not applicable to Available-for-Sale securities. See Notes 2, 3, 6 and 7 for more information.
See Notes to Consolidated Financial Statements.

5
AMERIPRISE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
Number of Outstanding SharesCommon SharesAdditional Paid-In CapitalRetained EarningsTreasury
Shares
Accumulated Other 
Comprehensive Income (Loss)
Total
(in millions, except per share data)
Balances at April 1, 2019134,183,507 $3 $8,270 $13,172 $(15,637)$35 $5,843 
Comprehensive income:
Net income— — — 492 — — 492 
Other comprehensive loss, net of tax— — — — — 234 234 
Total comprehensive income726 
Dividends to shareholders— — — (134)— — (134)
Repurchase of common shares(3,252,369)— — — (473)— (473)
Share-based compensation plans361,621 — 67 — 1 — 68 
Balances at June 30, 2019131,292,759 $3 $8,337 $13,530 $(16,109)$269 $6,030 
Balances at April 1, 2020122,334,887 $3 $8,578 $16,180 $(17,773)$(295)$6,693 
Comprehensive income:
Net income (loss)— — — (539)— — (539)
Other comprehensive income, net of tax— — — — — 689 689 
Total comprehensive income150 
Dividends to shareholders— — — (131)— — (131)
Repurchase of common shares(1,794,058)— — — (257)— (257)
Share-based compensation plans66,672 — 44 — 1 — 45 
Balances at June 30, 2020120,607,501 $3 $8,622 $15,510 $(18,029)$394 $6,500 
Balances at January 1, 2019136,330,747 $3 $8,260 $12,909 $(15,293)$(291)$5,588 
Cumulative effect of adoption of premium amortization on purchased callable debt securities guidance— — — (5)— — (5)
Comprehensive income:
Net income— — — 887 — — 887 
Other comprehensive loss, net of tax— — — — — 560 560 
Total comprehensive income1,447 
Dividends to shareholders— — — (261)— — (261)
Repurchase of common shares(6,452,276)— — — (872)— (872)
Share-based compensation plans1,414,288 — 77 — 56 — 133 
Balances at June 30, 2019131,292,759 $3 $8,337 $13,530 $(16,109)$269 $6,030 
Balances at January 1, 2020123,939,234 $3 $8,461 $14,279 $(17,276)$262 $5,729 
Cumulative effect of adoption of current expected credit losses guidance— — — (9)— — (9)
Comprehensive income:
Net income— — — 1,497 — — 1,497 
Other comprehensive income, net of tax— — — — — 132 132 
Total comprehensive income1,629 
Dividends to shareholders— — — (257)— — (257)
Repurchase of common shares(5,176,677)— — — (794)(794)
Share-based compensation plans1,844,944 — 161 — 41 — 202 
Balances at June 30, 2020120,607,501 $3 $8,622 $15,510 $(18,029)$394 $6,500 
See Notes to Consolidated Financial Statements.
Number of Outstanding SharesCommon SharesAdditional Paid-In CapitalRetained EarningsTreasury
Shares
Accumulated Other 
Comprehensive Income (Loss)
Total
(in millions, except per share data)
Balances at July 1, 2019131,292,759 $3 $8,337 $13,530 $(16,109)$269 $6,030 
Comprehensive income:
Net income— — — 543 — — 543 
Other comprehensive loss, net of tax— — — — — 68 68 
Total comprehensive income611 
Dividends to shareholders— — — (129)— — (129)
Repurchase of common shares(4,145,672)— — — (570)— (570)
Share-based compensation plans258,009 — 55 — — — 55 
Balances at September 30, 2019127,405,096 $3 $8,392 $13,944 $(16,679)$337 $5,997 
Balances at July 1, 2020120,607,501 $3 $8,622 $15,510 $(18,029)$394 $6,500 
Cumulative effect of adoption of current expected credit losses guidance— — — — — — — 
Comprehensive income:
Net income (loss)— — — (140)— — (140)
Other comprehensive income, net of tax— — — — — 122 122 
Total comprehensive income (loss)(18)
Dividends to shareholders— — — (129)— — (129)
Repurchase of common shares(2,215,753)— — — (341)— (341)
Share-based compensation plans239,861 — 55 — — — 55 
Balances at September 30, 2020118,631,609 $3 $8,677 $15,241 $(18,370)$516 $6,067 
Balances at January 1, 2019136,330,747 $3 $8,260 $12,909 $(15,293)$(291)$5,588 
Cumulative effect of adoption of premium amortization on purchased callable debt securities guidance— — — (5)— — (5)
Comprehensive income:
Net income— — — 1,430 — — 1,430 
Other comprehensive loss, net of tax— — — — — 628 628 
Total comprehensive income2,058 
Dividends to shareholders— — — (390)— — (390)
Repurchase of common shares(10,597,948)— — — (1,442)—(1,442)
Share-based compensation plans1,672,297 — 132 — 56 — 188 
Balances at September 30, 2019127,405,096 $3 $8,392 $13,944 $(16,679)$337 $5,997 
Balances at January 1, 2020123,939,234 $3 $8,461 $14,279 $(17,276)$262 $5,729 
Cumulative effect of adoption of current expected credit losses guidance— — — (9)— — (9)
Comprehensive income:
Net income— — — 1,357 — — 1,357 
Other comprehensive income, net of tax— — — — — 254 254 
Total comprehensive income1,611 
Dividends to shareholders— — — (386)— — (386)
Repurchase of common shares(7,392,430)— — — (1,135)— (1,135)
Share-based compensation plans2,084,805 — 216 — 41 — 257 
Balances at September 30, 2020118,631,609 $3 $8,677 $15,241 $(18,370)$516 $6,067 
See Notes to Consolidated Financial Statements.
6
AMERIPRISE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, Nine Months Ended September 30,
20202019 20202019
(in millions) (in millions)
Cash Flows from Operating ActivitiesCash Flows from Operating ActivitiesCash Flows from Operating Activities
Net incomeNet income$1,497  $887  Net income$1,357 $
Adjustments to reconcile net income to net cash provided by (used in) operating activities:Adjustments to reconcile net income to net cash provided by (used in) operating activities:Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion, netDepreciation, amortization and accretion, net96  91  Depreciation, amortization and accretion, net150 132 
Deferred income tax expense (benefit)Deferred income tax expense (benefit)521  (64) Deferred income tax expense (benefit)198 (239)
Share-based compensationShare-based compensation72  64  Share-based compensation107 100 
Net realized investment (gains) lossesNet realized investment (gains) losses(10) (10) Net realized investment (gains) losses(14)(15)
Net trading (gains) lossesNet trading (gains) losses(6) (6) Net trading (gains) losses(9)(8)
Loss from equity method investmentsLoss from equity method investments39  29  Loss from equity method investments58 54 
Impairments and provision for loan lossesImpairments and provision for loan losses20  5  Impairments and provision for loan losses19 20 
Net (gains) losses of consolidated investment entitiesNet (gains) losses of consolidated investment entities13  5  Net (gains) losses of consolidated investment entities(7)8 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Restricted and segregated investmentsRestricted and segregated investments—  124  Restricted and segregated investments0 124 
Deferred acquisition costsDeferred acquisition costs156  (76) Deferred acquisition costs187 (40)
Policyholder account balances, future policy benefits and claims, netPolicyholder account balances, future policy benefits and claims, net2,721  259  Policyholder account balances, future policy benefits and claims, net3,252 1,068 
Derivatives, net of collateralDerivatives, net of collateral(267) 280  Derivatives, net of collateral265 71 
ReceivablesReceivables(131) 120  Receivables(216)205 
Brokerage depositsBrokerage deposits192  (524) Brokerage deposits205 (492)
Accounts payable and accrued expensesAccounts payable and accrued expenses(205) (91) Accounts payable and accrued expenses(94)(43)
Current income tax expense (benefit)Current income tax expense (benefit)(382) (7) Current income tax expense (benefit)(100)57 
Other operating assets and liabilities of consolidated investment entities, netOther operating assets and liabilities of consolidated investment entities, net(6) (6) Other operating assets and liabilities of consolidated investment entities, net20 (12)
Other, netOther, net383  72  Other, net261 154 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities4,703  1,152  Net cash provided by (used in) operating activities5,639 2,574 
Cash Flows from Investing ActivitiesCash Flows from Investing ActivitiesCash Flows from Investing Activities
Available-for-Sale securities:Available-for-Sale securities:Available-for-Sale securities:
Proceeds from salesProceeds from sales1,318  110  Proceeds from sales1,690 219 
Maturities, sinking fund payments and callsMaturities, sinking fund payments and calls4,162  4,012  Maturities, sinking fund payments and calls6,568 6,107 
PurchasesPurchases(6,138) (5,294) Purchases(10,197)(7,508)
Proceeds from sales, maturities and repayments of mortgage loansProceeds from sales, maturities and repayments of mortgage loans92  131  Proceeds from sales, maturities and repayments of mortgage loans146 188 
Funding of mortgage loansFunding of mortgage loans(132) (127) Funding of mortgage loans(147)(197)
Proceeds from sales, maturities and collections of other investmentsProceeds from sales, maturities and collections of other investments109  149  Proceeds from sales, maturities and collections of other investments139 215 
Purchase of other investmentsPurchase of other investments(134) (159) Purchase of other investments(219)(227)
Purchase of investments by consolidated investment entitiesPurchase of investments by consolidated investment entities(376) (392) Purchase of investments by consolidated investment entities(679)(524)
Proceeds from sales, maturities and repayments of investments by consolidated investment entitiesProceeds from sales, maturities and repayments of investments by consolidated investment entities343  319  Proceeds from sales, maturities and repayments of investments by consolidated investment entities454 521 
Purchase of land, buildings, equipment and softwarePurchase of land, buildings, equipment and software(62) (67) Purchase of land, buildings, equipment and software(107)(100)
Cash paid for written options with deferred premiumsCash paid for written options with deferred premiums(258) (42) Cash paid for written options with deferred premiums(292)(124)
Cash received from written options with deferred premiumsCash received from written options with deferred premiums108  44  Cash received from written options with deferred premiums129 71 
Cash paid for deposit receivableCash paid for deposit receivable(1) (347) Cash paid for deposit receivable(3)(348)
Cash received for deposit receivableCash received for deposit receivable53  41  Cash received for deposit receivable74 74 
Other, netOther, net20  (7) Other, net23 (103)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities$(896) $(1,629) Net cash provided by (used in) investing activities$(2,421)$(1,736)

See Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.
7
AMERIPRISE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
Six Months Ended June 30, Nine Months Ended September 30,
20202019 20202019
(in millions) (in millions)
Cash Flows from Financing ActivitiesCash Flows from Financing ActivitiesCash Flows from Financing Activities
Investment certificates:Investment certificates:Investment certificates:
Proceeds from additionsProceeds from additions$2,534  $2,924  Proceeds from additions$3,428 $4,029 
Maturities, withdrawals and cash surrendersMaturities, withdrawals and cash surrenders(2,599) (2,873) Maturities, withdrawals and cash surrenders(3,780)(4,184)
Policyholder account balances:Policyholder account balances:Policyholder account balances:
Deposits and other additionsDeposits and other additions774  1,151  Deposits and other additions1,202 1,620 
Net transfers from (to) separate accountsNet transfers from (to) separate accounts(15) (28) Net transfers from (to) separate accounts(63)(46)
Surrenders and other benefitsSurrenders and other benefits(726) (926) Surrenders and other benefits(1,035)(1,320)
Change in banking deposits, netChange in banking deposits, net1,510  2,205  Change in banking deposits, net2,532 2,543 
Cash paid for purchased options with deferred premiumsCash paid for purchased options with deferred premiums(131) (95) Cash paid for purchased options with deferred premiums(177)(158)
Cash received from purchased options with deferred premiumsCash received from purchased options with deferred premiums39  60  Cash received from purchased options with deferred premiums40 220 
Issuance of long-term debtIssuance of long-term debt496  497  Issuance of long-term debt494 497 
Repayments of long-term debtRepayments of long-term debt(756) (307) Repayments of long-term debt(760)(310)
Dividends paid to shareholdersDividends paid to shareholders(250) (253) Dividends paid to shareholders(375)(380)
Repurchase of common sharesRepurchase of common shares(716) (827) Repurchase of common shares(1,036)(1,392)
Exercise of stock optionsExercise of stock options2  1  Exercise of stock options2 2 
Borrowings by consolidated investment entitiesBorrowings by consolidated investment entities382 0 
Repayments of debt by consolidated investment entitiesRepayments of debt by consolidated investment entities(37) (33) Repayments of debt by consolidated investment entities(55)(57)
Other, netOther, net(8) —  Other, net(6)0 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities117  1,496  Net cash provided by (used in) financing activities793 1,064 
Effect of exchange rate changes on cashEffect of exchange rate changes on cash(18) 2  Effect of exchange rate changes on cash(5)(15)
Net increase (decrease) in cash and cash equivalents, including amounts restricted and cash balances classified as assets held-for-saleNet increase (decrease) in cash and cash equivalents, including amounts restricted and cash balances classified as assets held-for-sale3,906  1,021  Net increase (decrease) in cash and cash equivalents, including amounts restricted and cash balances classified as assets held-for-sale4,006 1,887 
Less: Net change in cash balances classified as assets held for saleLess: Net change in cash balances classified as assets held for sale—  166  Less: Net change in cash balances classified as assets held for sale0 204 
Net increase (decrease) in cash and cash equivalents, including amounts restrictedNet increase (decrease) in cash and cash equivalents, including amounts restricted3,906  855  Net increase (decrease) in cash and cash equivalents, including amounts restricted4,006 1,683 
Cash and cash equivalents, including amounts restricted, at beginning of periodCash and cash equivalents, including amounts restricted, at beginning of period6,213  5,883  Cash and cash equivalents, including amounts restricted, at beginning of period6,213 5,883 
Cash and cash equivalents, including amounts restricted, at end of periodCash and cash equivalents, including amounts restricted, at end of period$10,119  $6,738  Cash and cash equivalents, including amounts restricted, at end of period$10,219 $7,566 
Supplemental Disclosures:Supplemental Disclosures:Supplemental Disclosures:
Interest paid excluding consolidated investment entitiesInterest paid excluding consolidated investment entities$100  $142  Interest paid excluding consolidated investment entities$136 $209 
Interest paid by consolidated investment entitiesInterest paid by consolidated investment entities33  42  Interest paid by consolidated investment entities45 64 
Income taxes paid, netIncome taxes paid, net51  202  Income taxes paid, net116 345 
Leased assets obtained in exchange for finance lease liabilitiesLeased assets obtained in exchange for finance lease liabilities—  13  Leased assets obtained in exchange for finance lease liabilities0 13 
Leased assets obtained in exchange for operating lease liabilitiesLeased assets obtained in exchange for operating lease liabilities51  18  Leased assets obtained in exchange for operating lease liabilities68 30 
Non-cash investing activity:Non-cash investing activity:Non-cash investing activity:
Partnership commitments not yet remittedPartnership commitments not yet remitted2  2  Partnership commitments not yet remitted4 4 
Investments transferred in connection with reinsurance transactionInvestments transferred in connection with reinsurance transaction—  1,265  Investments transferred in connection with reinsurance transaction0 1,265 
June 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions)(in millions)
Reconciliation of cash and cash equivalents, including amounts restricted:Reconciliation of cash and cash equivalents, including amounts restricted:Reconciliation of cash and cash equivalents, including amounts restricted:
Cash and cash equivalentsCash and cash equivalents$7,654  $3,709  Cash and cash equivalents$7,441 $3,709 
Cash of consolidated investment entitiesCash of consolidated investment entities49  118  Cash of consolidated investment entities227 118 
Restricted and segregated cash, cash equivalents and investmentsRestricted and segregated cash, cash equivalents and investments2,416  2,386  Restricted and segregated cash, cash equivalents and investments2,551 2,386 
Total cash and cash equivalents including amounts restricted per consolidated statements of cash flowsTotal cash and cash equivalents including amounts restricted per consolidated statements of cash flows$10,119  $6,213  Total cash and cash equivalents including amounts restricted per consolidated statements of cash flows$10,219 $6,213 

See Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.
8
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   
1. Basis of Presentation
Ameriprise Financial, Inc. is a holding company, which primarily conducts business through its subsidiaries to provide financial planning, products and services that are designed to be utilized as solutions for clients’ cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs. The foreign operations of Ameriprise Financial, Inc. are conducted primarily through Threadneedle Asset Management Holdings Sàrl and Ameriprise Asset Management Holdings GmbHSingapore (Pte.) Ltd and their respective subsidiaries (collectively, “Threadneedle”).
The accompanying Consolidated Financial Statements include the accounts of Ameriprise Financial, Inc., companies in which it directly or indirectly has a controlling financial interest and variable interest entities (“VIEs”) in which it is the primary beneficiary (collectively, the “Company”). All intercompany transactions and balances have been eliminated in consolidation.
The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for fair statement of the consolidated results of operations and financial position for the interim periods have been made. All adjustments made were of a normal recurring nature.
Changes to the Company’s reportable segments have been made as further discussed in Note 19. Certain prior period amounts have been revised to conform to current period presentation. These changes have no impact on previously reported consolidated balance sheets or statements of operations, comprehensive income, stockholders equity, or cash flows.
In the first quarter of 2020, the Company recorded an out-of-period correction of $19 million to management and financial advice fees related to performance fees. The impact of the correction was not material to the prior period financial statements.
The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020 (“2019 10-K”).
The Company evaluated events or transactions that may have occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued. No subsequent events or transactions were identified.
2. Summary of Significant Accounting Policies
The Company adopted accounting standard, Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments, on January 1, 2020. The significant accounting policies for Available-for-Sale Securities, Financing Receivables, and Reinsurance were updated as a result of adopting the new accounting standard. Refer to Note 3 for further details of the adoption.
Available-for-Sale Securities
Available-for-Sale securities are carried at fair value with unrealized gains (losses) recorded in accumulated other comprehensive income (“AOCI”), net of impacts to deferred acquisition costs (“DAC”), deferred sales inducement costs (“DSIC”), unearned revenue, benefit reserves, reinsurance recoverables and income taxes. Available-for-Sale securities are recorded within investments on the Consolidated Balance Sheets. Gains and losses are recognized on a trade date basis in the Consolidated Statements of Operations upon disposition of the securities.
Available-for-Sale securities are impaired when the fair value of an investment is less than its amortized cost. When an Available-for-Sale security is impaired, the Company first assesses whether or not: (i) it has the intent to sell the security (made a decision to sell) or (ii) it is more likely than not that the Company will be required to sell the security before its anticipated recovery. If either of these conditions exist, the Company recognizes an impairment by reducing the book value of the security for the difference between the investment’s amortized cost and its fair value with a corresponding charge to earnings. Subsequent increases in the fair value of Available-for-Sale securities that occur in periods after a write-down has occurred are recorded as unrealized gains in other comprehensive income (“OCI”), while subsequent decreases in fair value would continue to be recorded as reductions of book value with a charge to earnings.
For securities that do not meet the above criteria, the Company determines whether the decrease in fair value is due to a credit loss or due to other factors. The amount of impairment due to credit-related factors, if any, is recognized as an allowance for credit losses with a related charge to net investment income. The allowance for credit losses is limited to the amount by which the security’s amortized cost basis exceeds its fair value. The amount of the impairment related to other factors is recognized in OCI. Factors the Company considers in determining whether declines in the fair value of fixed maturity securities are due to credit-related factors include: (i) the extent to which the market value is below amortized cost; (ii) fundamental analysis of the liquidity, business prospects and overall financial condition of the issuer; and (iii) market events that could impact credit ratings, economic and business climate, litigation and government actions, and similar external business factors.
9
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
If through subsequent evaluation there is a sustained increase in cash flows expected, both the allowance and related charge to earnings may be reversed to reflect the increase in expected principal and interest payments. However, for Available-for-Sale securities that recognized an impairment prior to January 1, 2020 by reducing the book value of the security, the difference between the new amortized cost basis and the improved cash flows expected to be collected is accreted as interest income.
In order to determine the amount of the credit loss component for corporate debt securities, a best estimate of the present value of cash flows expected to be collected discounted at the security’s effective interest rate is compared to the amortized cost basis of the
9
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
security. The significant inputs to cash flow projections consider potential debt restructuring terms, projected cash flows available to pay creditors and the Company’s position in the debtor’s overall capital structure. When assessing potential credit-related impairments for structured investments (e.g., residential mortgage backed securities, commercial mortgage backed securities, asset backed securities and other structured investments), the Company also considers credit-related factors such as overall deal structure and its position within the structure, quality of underlying collateral, delinquencies and defaults, loss severities, recoveries, prepayments and cumulative loss projections.
Management has elected to exclude accrued interest in its measurement of the allowance for credit losses for Available-for-Sale securities. Accrued interest on Available-for-sale securities is recorded as earned in receivables on the Consolidated Balance Sheets. Available-for-Sale securities are placed on nonaccrual status when the accrued balance becomes 90 days past due or earlier based on management’s evaluation of the facts and circumstances of each security under review. At this time all previously accrued interest is reversed through net investment income.
Financing Receivables
Financing receivables are comprised of commercial loans, consumer loans, and deposit receivables.
Commercial Loans
Commercial loans include commercial mortgage loans, syndicated loans, and advisor loans and are recorded at amortized cost less the allowance for loan losses. Commercial mortgage loans and syndicated loans are recorded within investments on the Consolidated Balance Sheets. Advisor loans are recorded within receivables on the Consolidated Balance Sheets. Commercial mortgage loans are loans on commercial properties that are originated by the Company. Syndicated loans represent the Company’s investment in loan syndications originated by unrelated third parties. The Company offers loans to financial advisors primarily for recruiting, transitional cost assistance and retention purposes. These advisor loans are generally repaid over a five- to ten-year period. If the financial advisor is no longer affiliated with the Company, any unpaid balance of such loan becomes immediately due.
Interest income is accrued as earned on the unpaid principal balances of the loans. Interest income recognized on commercial mortgage loans and syndicated loans is recorded in net investment income on the Consolidated Statements of Operations. Interest income recognized on advisor loans is recorded in other revenues on the Consolidated Statements of Operations.
Consumer Loans
Consumer loans consist of credit card receivables, policy loans, and brokerage margin loans and are recorded at amortized cost less the allowance for loan losses. Credit card receivables and policy loans are recorded within investments on the Consolidated Balance Sheets. Brokerage margin loans are recorded within receivables on the Consolidated Balance Sheets. Credit card receivables are related to Ameriprise-branded credit cards issued to the Company’s customers by a third party. When originated, policy loan balances do not exceed the cash surrender value of the underlying products. As there is minimal risk of loss related to policy loans, the Company does not record an allowance for loan losses. The Company’s broker dealer subsidiaries enter into lending arrangements with clients through the normal course of business, which are primarily based on customer margin levels.
Interest income is accrued as earned on the unpaid principal balances of the loans. Interest income recognized on consumer loans is recorded in net investment income on the Consolidated Statements of Operations.
Deposit Receivable
For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability related to insurance risk in accordance with applicable accounting standards. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Reinsurance deposits made are included in receivables. As amounts are received, consistent with the underlying contracts, the deposit receivable is adjusted. The deposit receivable is accreted using the interest method and the accretion is reported in other revenues.
See Note 7 for additional information on financing receivables.
10
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Allowance for Credit Losses
The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected over the asset’s expected life, considering past events, current conditions and reasonable and supportable forecasts of future economic conditions. Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset. Estimates of expected credit losses consider both historical charge-off and recovery experience as well as management’s expectation of future charge-off and recovery levels. Expected losses related to risks other than credit risk are excluded from the allowance for credit losses. The allowance for credit losses is measured and recorded upon initial recognition of the loan, regardless of whether it is originated or purchased. The methods and information used to develop the allowance for credit losses for each class of financing receivable are discussed below.
10
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Commercial Loans
The allowance for credit losses for commercial mortgage loans and syndicated loans utilizes a probability of default and loss severity approach to estimate lifetime expected credit losses. Actual historical default and loss severity data for each type of commercial loan is adjusted for current conditions and reasonable and supportable forecasts of future economic conditions to develop the probability of default and loss severity assumptions that are applied to the amortized cost basis of the loans over the expected life of each portfolio. The allowance for credit losses on commercial mortgage loans and syndicated loans is recorded through provisions charged to net investment income and is reduced/increased by net charge-offs/recoveries.
Management determines the adequacy of the allowance for credit losses based on the overall loan portfolio composition, recent and historical loss experience, and other pertinent factors, including when applicable, internal risk ratings, loan-to-value (“LTV”) ratios and occupancy rates, along with reasonable and supportable forecasts of economic and market conditions. This evaluation is inherently subjective as it requires estimates, which may be susceptible to significant change. While the Company may attribute portions of the allowance to specific loan pools as part of the allowance estimation process, the entire allowance is available to absorb losses expected over the life of the loan portfolio.
When determining the allowance for credit losses for advisor loans, the Company considers its actual historical collection experience and advisor termination experience as well as other factors including amounts due at termination, the reasons for the terminated relationship, length of time since termination, and the former financial advisor’s overall financial position. Management uses its best estimate of future termination and collection rates to estimate expected credit losses over the expected life of the loans. The allowance for credit losses on advisor loans is recorded in distribution expenses.
Consumer Loans
The allowance for loan losses for credit card receivables is based on a model that projects the Company’s receivable exposure over the expected life of the loans using cohorts based on the age of the receivable, geographic location, and credit scores. The model utilizes industry data to derive probability of default and loss given default assumptions, adjusted for current and future economic conditions. Management evaluates actual historical charge-off experience and monitors risk factors including FICO scores and past-due status within the credit card portfolio to ensure the allowance for loan losses based on industry data appropriately reserves for risks specific to the Company’s portfolio. The allowance for credit losses for credit card receivables is recorded in net investment income.
The Company monitors the market value of collateral supporting the margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. Due to these ongoing monitoring procedures, the allowance for credit losses is only measured for the margin loan balances that are uncollateralized at the balance sheet date.
Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, the Company does not record anthere is no allowance for credit losses.
Deposit receivable
The allowance for credit losses is calculated on an individual reinsurer basis. The deposit receivable is collateralized by an underlying trust arrangement. Management evaluates the terms of the reinsurance and trust agreements, the nature of the underlying assets, and the potential for changes in the collateral value when considering the need for an allowance for credit losses.
Nonaccrual Loans
Commercial mortgage loans and syndicated loans are placed on nonaccrual status when either the collection of interest or principal has become 90 days past due or is otherwise considered doubtful of collection. Advisor loans are placed on nonaccrual status upon the advisor’s termination. When a loan is placed on nonaccrual status, unpaid accrued interest is reversed. Interest payments received on loans on nonaccrual status are generally applied to principal unless the remaining principal balance has been determined to be fully collectible. Management has elected to exclude accrued interest in its measurement of the allowance for credit losses for commercial mortgage loans, syndicated loans, and consumer loans.
11
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Restructured Loans
A loan is classified as a restructured loan when the Company makes certain concessionary modifications to contractual terms for borrowers experiencing financial difficulties. When the interest rate, minimum payments, and/or due dates have been modified in an attempt to make the loan more affordable to a borrower experiencing financial difficulties, the modification is considered a troubled debt restructuring. Modifications to loan terms do not automatically result in troubled debt restructurings (“TDRs”). Per the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus, modifications made on a good faith basis in response to the coronavirus disease 2019 (“COVID-19”) pandemic to borrowers who were not more than 30 days past due as of December 31, 2019, such as payment deferrals, extensions of repayment terms, fee waivers, or delays in payment that are not significant to the unpaid principal value of the loan, are not considered TDRs. Generally, performance prior to the restructuring or significant events that coincide with the restructuring are considered in assessing whether the borrower can meet the new terms which may result in the loan being returned to accrual status at the time of the restructuring or after a performance period. If the borrower’s ability to meet the revised payment schedule is not reasonably assured, the loan remains on nonaccrual status.
11
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Charge-off and Foreclosure
Commercial Loans
Charge-offs are recorded when the Company concludes that all or a portion of the commercial mortgage loan or syndicated loan is uncollectible. Factors used by the Company to determine whether all amounts due on commercial mortgage loans will be collected, include but are not limited to, the financial condition of the borrower, performance of the underlying properties, collateral and/or guarantees on the loan, and the borrower’s estimated future ability to pay based on property type and geographic location. Factors used by the Company to determine whether all amounts due on syndicated loans will be collected, include but are not limited to the borrower’s financial condition, industry outlook, and internal risk ratings based on rating agency data and internal analyst expectations.
If it is determined that foreclosure on a commercial mortgage loan is probable and the fair value is less than the current loan balance, expected credit losses are measured as the difference between the amortized cost basis of the asset and fair value less estimated selling costs. Upon foreclosure, the commercial mortgage loan and related allowance are reversed, and the foreclosed property is recorded as real estate owned in other assets.
Concerns regarding the recoverability of loans to advisors primarily arise in the event that the financial advisor is no longer affiliated with the Company. When the review of these factors indicates that further collection activity is highly unlikely, the outstanding balance of the loan is written-off and the related allowance is reduced.
Consumer Loans
Credit card receivables are not placed on nonaccrual status at 90 days past due, however, are fully charged off upon reaching 180 days past due.
Reinsurance
Policyholder account balances, future policy benefits and claims recoverable under reinsurance contracts are recorded within receivables, net of the allowance for credit losses. The Company evaluates the financial condition of its reinsurers prior to entering into new reinsurance contracts and on a periodic basis during the contract term. The allowance for credit losses related to reinsurance recoverable is based on applying observable industry data including insurer ratings, default and loss severity data to the Company’s reinsurance recoverable balances. Management evaluates the results of the calculation and considers differences between the industry data and the Company’s data. Such differences include the fact the Company has no actual history of losses and the fact that industry data may contain non-life insurers. This evaluation is inherently subjective as it requires estimates, which may be susceptible to significant change given the long-term nature of these receivables. In addition, the Company has a reinsurance protection agreement that provides credit protections for its reinsured long term care business. The allowance for credit losses on reinsurance recoverable is recorded through provisions charged to benefits, claims, losses and settlement expenses on the Consolidated Statements of Operations.
12
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
3.  Recent Accounting Pronouncements
Adoption of New Accounting Standards
Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board (“FASB”) updated the accounting standards related to disclosures for fair value measurements. The update eliminates the following disclosures: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy of timing of transfers between levels of the fair value hierarchy, and 3) the valuation processes for Level 3 fair value measurements. The new disclosures include changes in unrealized gains and losses for the period included in OCI for recurring Level 3 fair value measurements of instruments held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs and how the weighted average was calculated. The new disclosures are required on a prospective basis; all other provisions should be applied retrospectively. The update is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for the entire standard or only the provisions to eliminate or modify disclosure requirements. The Company early adopted the provisions of the standard to eliminate or modify disclosure requirements in the fourth quarter of 2018. The Company adopted the provisions of the standard to include new disclosures on January 1, 2020. The update does not have an impact on the Company’s consolidated results of operations or financial condition. See Note 12 for additional disclosures on fair value measurements.
Intangibles – Goodwill and Other – Internal-Use Software – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
In August 2018, the FASB updated the accounting standards related to customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. The update requires implementation costs for a CCA to be evaluated for capitalization using the same approach as implementation costs associated with internal-use software. The update also addresses presentation, measurement and impairment of capitalized implementation costs in a CCA that is a service contract. The update requires new disclosures on the nature of hosting arrangements that are service contracts, significant judgements made when applying the guidance and quantitative disclosures, including amounts capitalized, amortized and impaired. The update is effective for interim
12
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
and annual periods beginning after December 15, 2019, and can be applied either prospectively or retrospectively. The Company adopted the standard using a prospective approach on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.
Intangibles – Goodwill and Other – Simplifying the Test for Goodwill Impairment
In January 2017, the FASB updated the accounting standards to simplify the accounting for goodwill impairment. The update removes the hypothetical purchase price allocation (Step 2) of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively with early adoption permitted for any impairment tests performed after January 1, 2017. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.
Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB updated the accounting standards related to accounting for credit losses on certain types of financial instruments. The update replaces the current incurred loss model for estimating credit losses with a new model that requires an entity to estimate the credit losses expected over the life of the asset. At adoption, the initial estimate of the expected credit losses will be recorded through retained earnings and subsequent changes in the estimate will be reported in current period earnings and recorded through an allowance for credit losses on the balance sheet. The credit loss model for Available-for-Sale debt securities did not change; however, the credit loss calculation and subsequent recoveries are required to be recorded through an allowance. The standard is effective for interim and annual periods beginning after December 15, 2019. A modified retrospective cumulative adjustment to retained earnings should be recorded as of the first reporting period in which the guidance is effective for loans, receivables, and other financial instruments subject to the new expected credit loss model. Prospective adoption is required for establishing an allowance related to Available-for-Sale debt securities, certain beneficial interests, and financial assets purchased with a more-than-insignificant amount of credit deterioration since origination. The Company adopted the standard on January 1, 2020. The adoption of this update did not have a material impact on the Company’s consolidated results of operations or financial condition.
Leases – Recognition of Lease Assets and Liabilities on Balance Sheet
In February 2016, the FASB updated the accounting standards for leases. The update was issued to increase transparency and comparability for the accounting of lease transactions. The standard requires most lease transactions for lessees to be recorded on the balance sheet as lease assets and lease liabilities and both quantitative and qualitative disclosures about leasing arrangements. The standard was effective for interim and annual periods beginning after December 15, 2018. Entities had the option to adopt the standard using a modified retrospective approach at either the beginning of the earliest period presented or as of the date of adoption. The Company adopted the standard using a modified retrospective approach as of January 1, 2019. The Company also elected the package of practical expedients permitted under the transition guidance within the accounting standard that allows entities to carryforward their
13
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
historical lease classification and to not reassess contracts for embedded leases among other things. The Company recorded a right-of-use asset of $274 million and a corresponding lease liability of $295 million substantially related to real estate leases. The amount the lease liability exceeds the right-of-use asset primarily reflects lease incentives recorded as a reduction of the right-of-use asset that were previously recorded as a liability. The adoption of the standard did not have other material impacts on the Company’s consolidated results of operations or financial condition.
Income Statement – Reporting Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
In February 2018, the FASB updated the accounting standards related to the presentation of tax effects stranded in AOCI. The update allows a reclassification from AOCI to retained earnings for tax effects stranded in AOCI resulting from the legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The election of the update was optional. The update was effective for fiscal years beginning after December 15, 2018. Entities could record the impacts either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company adopted the standard on January 1, 2019 and elected not to reclassify the stranded tax effects in AOCI.
Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities
In August 2017, the FASB updated the accounting standards to amend the hedge accounting recognition and presentation requirements. The objectives of the update are to better align the financial reporting of hedging relationships to the economic results of an entity’s risk management activities and simplify the application of the hedge accounting guidance. The update also adds new disclosures and amends existing disclosure requirements. The standard was effective for interim and annual periods beginning after December 15, 2018, and was required to be applied on a modified retrospective basis. The Company adopted the standard on January 1, 2019. The adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.
13
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Receivables – Nonrefundable Fees and Other Costs – Premium Amortization on Purchased Callable Debt Securities
In March 2017, the FASB updated the accounting standards to shorten the amortization period for certain purchased callable debt securities held at a premium. Under previous guidance, premiums were generally amortized over the contractual life of the security. The amendments require the premium to be amortized to the earliest call date. The update applies to securities with explicit, non-contingent call features that are callable at fixed prices and on preset dates. The standard was effective for interim and annual periods beginning after December 15, 2018, and was required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted the standard on January 1, 2019. The adoption did not have a material impact on the Company’s consolidated results of operations or financial condition.
Future Adoption of New Accounting Standards
Reference Rate Reform – Expedients for Contract Modifications
In March 2020, the FASB updated the accounting standards to provide optional expedients and exceptions for applying GAAP to contracts, hedging or other transactions that are affected by reference rate reform (i.e., the elimination of LIBOR). The following expedients are provided for modified contracts whose reference rate is changed: 1) receivables and debt contracts are accounted for prospectively by adjusting the effective interest rate, 2) leases are accounted for as a continuation of the existing contracts with no reassessments of the lease classification and discount rate or remeasurements of lease payments that otherwise would be required, and 3) an entity is not required to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions. The Company is currently evaluating the impact of electing to adopt the standard on its consolidated results of operations and financial condition.
Income Taxes – Simplifying the Accounting for Income Taxes
In December 2019, the FASB updated the accounting standards to simplify the accounting for income taxes. The update eliminates certain exceptions to accounting principles related to intraperiod tax allocation (prospective basis), deferred tax liabilities related to outside basis differences (modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption) and year-to-date losses in interim periods (prospective basis). The update also amends existing guidance related to situations when an entity receives a step-up in the tax basis of goodwill (prospective basis), allocation of income tax expense when members of a consolidated tax filing group issue separate financial statements (retrospective basis for all periods presented), interim recognition of enactment of tax laws or rate changes (prospective basis) and franchise taxes and other taxes partially based on income (retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption). The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The method of adoption is noted parenthetically after each amendment above. The Company is currently evaluating the impactadoption of the standard is not expected to have an impact on itsthe Company’s consolidated results of operations and financial condition.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Financial Services – Insurance – Targeted Improvements to the Accounting for Long-Duration Contracts
In August 2018, the FASB updated the accounting standard related to long-duration insurance contracts. The guidance revises key elements of the measurement models and disclosure requirements for long-duration insurance contracts issued by insurers and reinsurers.
The guidance establishes a significant new category of benefit features called market risk benefits that protect the contractholder from other-than-nominal capital market risk and expose the insurer to that risk. Insurers will have to measure market risk benefits at fair value. Market risk benefits include variable annuity guaranteed benefits (i.e. guaranteed minimum death, withdrawal, withdrawal for life, accumulation and income benefits). The portion of the change in fair value attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position will be recorded in OCI.
Significant changes also relate to the measurement of the liability for future policy benefits for nonparticipating traditional long-duration insurance contracts and immediate annuities with a life contingent feature include the following:
•Insurers will be required to review and update the cash flow assumptions used to measure the liability for future policy benefits rather than using assumptions locked in at contract inception. The review of assumptions to measure the liability for all future policy benefits will be required annually at the same time each year, or more frequently if suggested by experience. The effect of updating assumptions will be measured on a retrospective catch-up basis and presented separate from the ongoing policyholder benefit expense in the statement of operations in the period the update is made. This new unlocking process will be required for the Company’s term and whole life insurance, disability income, long term care insurance and immediate annuities with a life contingent feature.
•The discount rate used to measure the liability for future policy benefits will be standardized. The current requirement to use a discount rate reflecting expected investment yields will change to an upper-medium grade (low credit risk) fixed income corporate instrument yield (generally interpreted as an “A” rating) reflecting the duration characteristics of the liability. Entities will be required to update the discount rate at each reporting date with the effect of discount rate changes reflected in OCI.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
•The current premium deficiency test is being replaced with a net premium ratio cap of 100%. If the net premium ratio (i.e. the ratio of the present value of total expected benefits and related expenses to the present value of total expected premiums) exceeds 100%, insurers are required to recognize a loss in the statement of operations in the period. Contracts from different issue years will no longer be permitted to be grouped to determine contracts in a loss position.
In addition, the update requires DAC and DSIC relating to all long-duration contracts and most investment contracts to be amortized on a straight-line basis over the expected life of the contract independent of profit emergence. Under the new guidance, interest will not accrue to the deferred balance and DAC and DSIC will not be subject to an impairment test.
The update requires significant additional disclosures, including disaggregated rollforwards of the liability for future policy benefits, policyholder account balances, market risk benefits, DAC and DSIC, as well as qualitative and quantitative information about expected cash flows, estimates and assumptions. The update is currently effective for interim and annual periods beginning after December 15, 2021. On July 9,November 5, 2020, the FASB released a proposed Accounting Standards Update (“ASU”) that wouldan updated ASU to defer the effective date of the standard to interim and annual periods beginning after December 15, 2022, and interim periods within those fiscal years. The proposed ASU is exposed for public comment until August 24, 2020. The standard should be applied to the liability for future policy benefits and DAC and DSIC on a modified retrospective basis and applied to market risk benefits on a retrospective basis with the option to apply full retrospective transition if certain criteria are met. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its consolidated results of operations, financial condition and disclosures.
15
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
4. Revenue from Contracts with Customers
During the third quarter of 2020, the composition of the Company’s reportable segments changed from five to four segments. The Retirement & Protection Solutions segment includes Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, the Company moved the Fixed Annuities and Fixed Indexed Annuities business to the Corporate & Other segment as a closed block. Certain prior period amounts have been revised to conform to the current presentation. See Note 19 for additional information on this change.
The following tables present revenue disaggregated by segment on an adjusted operating basis with a reconciliation of segment revenues to those reported on the Consolidated Statements of Operations:
Three Months Ended June 30, 2020
Advice & Wealth ManagementAsset ManagementAnnuitiesProtectionCorporate & OtherTotal SegmentsNon-
operating
Revenue		Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail$—  $417  $—  $—  $—  $417  $—  $417  
Institutional—  101  —  —  —  101  —  101  
Advisory fees797  —  —  —  —  797  —  797  
Financial planning fees86  —  —  —  —  86  —  86  
Transaction and other fees86  45  14  2  —  147  —  147  
Total management and financial advice fees969  563  14  2  —  1,548  —  1,548  
Distribution fees:
Mutual funds170  55  —  —  —  225  —  225  
Insurance and annuity196  41  82  23  —  342  —  342  
Other products87  —  —  —  —  87  —  87  
Total distribution fees453  96  82  23  —  654  —  654  
Other revenues47  1  —  —  —  48  —  48  
Total revenue from contracts
   with customers
1,469  660  96  25  —  2,250  —  2,250  
Revenue from other sources (1)
86  8  487  232  47  860  (51) 809  
Total segment gross revenues1,555  668  583  257  47  3,110  (51) 3,059  
Less: Banking and deposit interest expense18  —  —  —  1  19  —  19  
Total segment net revenues1,537  668  583  257  46  3,091  (51) 3,040  
Less: Intersegment revenues208  13  90  15  —  326  2  328  
Total net revenues$1,329  $655  $493  $242  $46  $2,765  $(53) $2,712  

15
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Three Months Ended June 30, 2019
Advice & Wealth ManagementAsset ManagementAnnuitiesProtectionCorporate & OtherTotal SegmentsNon-
operating
Revenue		Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail$—  $442  $—  $—  $—  $442  $—  $442  
Institutional—  111  —  —  —  111  —  111  
Advisory fees779  —  —  —  —  779  —  779  
Financial planning fees84  —  —  —  —  84  —  84  
Transaction and other fees91  47  14  2  —  154  —  154  
Total management and financial advice fees954  600  14  2  —  1,570  —  1,570  
Distribution fees:
Mutual funds182  60  —  —  —  242  —  242  
Insurance and annuity218  43  81  7  2  351  —  351  
Other products180  —  —  —  —  180  —  180  
Total distribution fees580  103  81  7  2  773  —  773  
Other revenues49  3  (2) —  —  50  —  50  
Total revenue from contracts
   with customers
1,583  706  93  9  2  2,393  —  2,393  
Revenue from other sources (1)
106  7  527  250  352  1,242  (1) 1,241  
Total segment gross revenues1,689  713  620  259  354  3,635  (1) 3,634  
Less: Banking and deposit interest expense36  1  —  —  2  39  —  39  
Total segment net revenues1,653  712  620  259  352  3,596  (1) 3,595  
Less: Intersegment revenues230  14  91  15  (1) 349  1  350  
Total net revenues$1,423  $698  $529  $244  $353  $3,247  $(2) $3,245  


Three Months Ended September 30, 2020
Advice & Wealth ManagementAsset ManagementRetirement & Protection SolutionsCorporate & OtherTotal SegmentsNon-operating
Revenue		Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail$— $466 $— $— $466 $— $466 
Institutional— 122 — — 122 — 122 
Advisory fees907 — — — 907 — 907 
Financial planning fees81 — — — 81 — 81 
Transaction and other fees89 47 14 — 150 — 150 
Total management and financial advice fees1,077 635 14 — 1,726 — 1,726 
Distribution fees:
Mutual funds186 59 — — 245 — 245 
Insurance and annuity202 45 75 — 322 — 322 
Other products91 — — — 91 — 91 
Total distribution fees479 104 75 — 658 — 658 
Other revenues44 — 5 — 49 — 49 
Total revenue from contracts with customers1,600 739 94 — 2,433 — 2,433 
Revenue from other sources (1)
77 — 687 132 896 27 923 
Total segment gross revenues1,677 739 781 132 3,329 27 3,356 
Less: Banking and deposit interest expense10 — — — 10 — 10 
Total segment net revenues1,667 739 781 132 3,319 27 3,346 
Less: Intersegment revenues219 13 110 — 342 1 343 
Total net revenues$1,448 $726 $671 $132 $2,977 $26 $3,003 
16
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Six Months Ended June 30, 2020
Advice & Wealth ManagementAsset ManagementAnnuitiesProtectionCorporate & OtherTotal SegmentsNon-
operating
Revenue		Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail$—  $864  $—  $—  $—  $864  $—  $864  
Institutional—  186  —  —  —  186  —  186  
Advisory fees1,651  —  —  —  —  1,651  —  1,651  
Financial planning fees167  —  —  —  —  167  —  167  
Transaction and other fees175�� 92  27  4  —  298  —  298  
Total management and financial advice fees1,993  1,142  27  4  —  3,166  —  3,166  
Distribution fees:
Mutual funds354  115  —  —  —  469  —  469  
Insurance and annuity404  84  161  30  —  679  —  679  
Other products243  —  —  —  —  243  —  243  
Total distribution fees1,001  199  161  30  —  1,391  —  1,391  
Other revenues94  2  —  —  3  99  —  99  
Total revenue from contracts
   with customers
3,088  1,343  188  34  3  4,656  —  4,656  
Revenue from other sources (1)
187  11  984  480  107  1,769  1  1,770  
Total segment gross revenues3,275  1,354  1,172  514  110  6,425  1  6,426  
Less: Banking and deposit interest expense43  —  —  —  2  45  —  45  
Total segment net revenues3,232  1,354  1,172  514  108  6,380  1  6,381  
Less: Intersegment revenues430  26  180  29  (1) 664  4  668  
Total net revenues$2,802  $1,328  $992  $485  $109  $5,716  $(3) $5,713  

Three Months Ended September 30, 2019
Advice & Wealth ManagementAsset ManagementRetirement & Protection SolutionsCorporate & OtherTotal SegmentsNon-operating
Revenue		Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail$— $448 $— $— $448 $— $448 
Institutional— 135 — — 135 — 135 
Advisory fees813 — — — 813 — 813 
Financial planning fees80 — — — 80 — 80 
Transaction and other fees91 48 16 — 155 — 155 
Total management and financial advice fees984 631 16 — 1,631 — 1,631 
Distribution fees:
Mutual funds183 59 — — 242 — 242 
Insurance and annuity226 43 91 1 361 — 361 
Other products169 — — — 169 — 169 
Total distribution fees578 102 91 1 772 — 772 
Other revenues40 — — — 40 — 40 
Total revenue from contracts with customers1,602 733 107 1 2,443 — 2,443 
Revenue from other sources (1)
115 8 681 450 1,254 19 1,273 
Total segment gross revenues1,717 741 788 451 3,697 19 3,716 
Less: Banking and deposit interest expense35 (1)— 1 35 — 35 
Total segment net revenues1,682 742 788 450 3,662 19 3,681 
Less: Intersegment revenues240 13 110 (1)362 2 364 
Total net revenues$1,442 $729 $678 $451 $3,300 $17 $3,317 


17
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Six Months Ended June 30, 2019Nine Months Ended September 30, 2020
Advice & Wealth ManagementAsset ManagementAnnuitiesProtectionCorporate & OtherTotal SegmentsNon-
operating
Revenue		TotalAdvice & Wealth ManagementAsset ManagementRetirement & Protection SolutionsCorporate & OtherTotal SegmentsNon-operating
Revenue		Total
(in millions)(in millions)
Management and financial advice fees:Management and financial advice fees:Management and financial advice fees:
Asset management fees:Asset management fees:Asset management fees:
RetailRetail$—  $871  $—  $—  $—  $871  $—  $871  Retail$— $1,330 $— $— $1,330 $— $1,330 
InstitutionalInstitutional—  215  —  —  —  215  —  215  Institutional— 308 — — 308 — 308 
Advisory feesAdvisory fees1,504  —  —  —  —  1,504  —  1,504  Advisory fees2,558 — — — 2,558 — 2,558 
Financial planning feesFinancial planning fees153  —  —  —  —  153  —  153  Financial planning fees248 — — — 248 — 248 
Transaction and other feesTransaction and other fees175  93  27  4  —  299  —  299  Transaction and other fees264 139 45 — 448 — 448 
Total management and financial advice feesTotal management and financial advice fees1,832  1,179  27  4  —  3,042  —  3,042  Total management and financial advice fees3,070 1,777 45 — 4,892 — 4,892 
Distribution fees:Distribution fees:Distribution fees:
Mutual fundsMutual funds353  117  —  —  —  470  —  470  Mutual funds540 174 — — 714 — 714 
Insurance and annuityInsurance and annuity423  84  160  14  4  685  —  685  Insurance and annuity606 129 266 — 1,001 — 1,001 
Other productsOther products365  —  —  —  —  365  —  365  Other products334 — — — 334 — 334 
Total distribution feesTotal distribution fees1,141  201  160  14  4  1,520  —  1,520  Total distribution fees1,480 303 266 — 2,049 — 2,049 
Other revenuesOther revenues94  4  —  —  —  98  —  98  Other revenues138 2 5 3 148 — 148 
Total revenue from contracts
with customers
Total revenue from contracts
with customers
3,067  1,384  187  18  4  4,660  —  4,660  Total revenue from contracts with customers4,688 2,082 316 3 7,089 — 7,089 
Revenue from other sources (1)
Revenue from other sources (1)
211  18  1,037  503  694  2,463  2  2,465  
Revenue from other sources (1)
264 11 1,979 411 2,665 28 2,693 
Total segment gross revenuesTotal segment gross revenues3,278  1,402  1,224  521  698  7,123  2  7,125  Total segment gross revenues4,952 2,093 2,295 414 9,754 28 9,782 
Less: Banking and deposit interest expenseLess: Banking and deposit interest expense71  1  —  —  4  76  —  76  Less: Banking and deposit interest expense53 — — 2 55 — 55 
Total segment net revenuesTotal segment net revenues3,207  1,401  1,224  521  694  7,047  2  7,049  Total segment net revenues4,899 2,093 2,295 412 9,699 28 9,727 
Less: Intersegment revenuesLess: Intersegment revenues449  27  179  30  (3) 682  4  686  Less: Intersegment revenues649 39 319 (1)1,006 5 1,011 
Total net revenuesTotal net revenues$2,758  $1,374  $1,045  $491  $697  $6,365  $(2) $6,363  Total net revenues$4,250 $2,054 $1,976 $413 $8,693 $23 $8,716 

18
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Nine Months Ended September 30, 2019
Advice & Wealth ManagementAsset ManagementRetirement & Protection SolutionsCorporate & OtherTotal SegmentsNon-operating
Revenue		Total
(in millions)
Management and financial advice fees:
Asset management fees:
Retail$— $1,319 $— $— $1,319 $— $1,319 
Institutional— 350 — — 350 — 350 
Advisory fees2,317 — — — 2,317 — 2,317 
Financial planning fees233 — — — 233 — 233 
Transaction and other fees266 141 47 — 454 — 454 
Total management and financial advice fees2,816 1,810 47 — 4,673 — 4,673 
Distribution fees:
Mutual funds536 176 — — 712 — 712 
Insurance and annuity649 127 265 5 1,046 — 1,046 
Other products534 — — — 534 — 534 
Total distribution fees1,719 303 265 5 2,292 — 2,292 
Other revenues134 4 — — 138 — 138 
Total revenue from contracts with customers4,669 2,117 312 5 7,103 — 7,103 
Revenue from other sources (1)
326 26 2,025 1,340 3,717 21 3,738 
Total segment gross revenues4,995 2,143 2,337 1,345 10,820 21 10,841 
Less: Banking and deposit interest expense106 — — 5 111 — 111 
Total segment net revenues4,889 2,143 2,337 1,340 10,709 21 10,730 
Less: Intersegment revenues689 40 319 (4)1,044 6 1,050 
Total net revenues$4,200 $2,103 $2,018 $1,344 $9,665 $15 $9,680 
(1) Revenues not included in the scope of the revenue from contracts with customers standard. The amounts primarily consist of revenue associated with insurance and annuity products or financial instruments.
The following discussion describes the nature, timing, and uncertainty of revenues and cash flows arising from the Company’s contracts with customers on a consolidated basis.
Management and Financial Advice Fees
Asset Management Fees
The Company earns revenue for performing asset management services for retail and institutional clients. The revenue is earned based on a fixed or tiered rate applied, as a percentage, to assets under management. Assets under management vary with market fluctuations and client behavior. The asset management performance obligation is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Asset management fees are accrued, invoiced and collected on a monthly or quarterly basis.
The Company’s asset management contracts for Open Ended Investment Companies (“OEICs”) and unit trusts in the UK and Société d'Investissement à Capital Variable (“SICAVs”) in Europe include performance obligations for asset management and fund distribution services. The amounts received for these services are reported as management and financial advice fees. The revenue recognition pattern is the same for both performance obligations as the fund distribution services revenue is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment) and not recognized until assets under management are known.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The Company may also earn performance-based management fees on institutional accounts, hedge funds, collateralized loan obligations (“CLOs��CLOs”), OEICs, SICAVs and property and other funds based on a percentage of account returns in excess of either a benchmark index or a contractually specified level. This revenue is variable and impacted primarily by the performance of the assets
19
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
being managed compared to the benchmark index or contractually specified level. The revenue is not recognized until it is probable that a significant reversal will not occur. Performance-based management fees are invoiced on a quarterly or annual basis.
Advisory Fees
The Company earns revenue for performing investment advisory services for certain brokerage customer’s discretionary and non-discretionary managed accounts. The revenue is earned based on a contractual fixed rate applied, as a percentage, to the market value of assets held in the account. The investment advisory performance obligation is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Advisory fees are billed on a monthly basis on the prior month end assets. Prior to the fourth quarter of 2019, advisory fees were primarily based on average assets for a monthly or quarterly period.
Financial Planning Fees
The Company earns revenue for providing financial plans to its clients. The revenue earned for each financial plan is either a fixed fee (received monthly, quarterly or annually) or a variable fee (received monthly) based on a contractual fixed rate applied, as a percentage, to the prior month end assets held in a client’s investment advisory account. The financial planning fee is based on the complexity of a client’s financial and life situation and his or her advisor’s experience. The performance obligation is satisfied at the time the financial plan is delivered to the customer. The Company records a contract liability for the unearned revenue when cash is received before the plan is delivered. The financial plan contracts with clients are annual contracts. Amounts recorded as a contract liability are recognized as revenue when the financial plan is delivered, which occurs within the annual contract period.
For fixed fee arrangements, revenue is recognized when the financial plan is delivered. The Company accrues revenue for any amounts that have not been received at the time the financial plan is delivered.
For variable fee arrangements, revenue is recognized for cash that has been received when the financial plan is delivered. The amount received after the plan is delivered is variably constrained due to factors outside the Company’s control including market volatility and client behavior. The revenue is recognized when it is probable that a significant reversal will not occur that is generally each month end as the advisory account balance uncertainty is resolved.
Contract liabilities for financial planning fees, which are included in other liabilities in the Consolidated Balance Sheets, were $133 million and $143 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
The Company pays sales commissions to advisors when a new financial planning contract is obtained or when an existing contract is renewed. The sales commissions paid to the advisors prior to financial plan delivery are considered costs to obtain a contract with a customer and are initially capitalized. When the performance obligation to deliver the financial plan is satisfied, the commission is recognized as distribution expense. Capitalized costs to obtain these contracts are reported in other assets in the Consolidated Balance Sheets and were $108$107 million and $116 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
Transaction and Other Fees
The Company earns revenue for providing customer support, shareholder and administrative services (including transfer agent services) for affiliated mutual funds and networking, sub-accounting and administrative services for unaffiliated mutual funds. The Company also receives revenue for providing custodial services and account maintenance services on brokerage and retirement accounts that are not included in an advisory relationship. Transfer agent and administrative revenue is earned based on either a fixed rate applied, as a percentage, to assets under management or an annual fixed fee for each fund position. Networking and sub-accounting revenue is earned based on either an annual fixed fee for each account or an annual fixed fee for each fund position. Custodial and account maintenance revenue is generally earned based on a quarterly or annual fixed fee for each account. Each of the customer support and administrative services performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. Transaction and other fees (other than custodial service fees) are invoiced or charged to brokerage accounts on a monthly or quarterly basis. Custodial service fees are invoiced or charged to brokerage accounts on an annual basis. Contract liabilities for custodial service fees, which are included in other liabilities in the Consolidated Balance Sheets, were $29$15 million and NaN as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
The Company earns revenue for providing trade execution services to franchise advisors. The trade execution performance obligation is satisfied at the time of each trade and the revenue is primarily earned based on a fixed fee per trade. These fees are invoiced and collected on a semi-monthly basis.
Distribution Fees
Mutual Funds and Insurance and Annuity Products
The Company earns revenue for selling affiliated and unaffiliated mutual funds, fixed and variable annuities and insurance products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the
19
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fund, or the value of the insurance policy or annuity contract. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long
20
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
clients hold their investment, insurance policy or annuity contract). This ongoing revenue may be recognized for many years after the initial sale. The revenue will not be recognized until it is probable that a significant reversal will not occur.
The Company earns revenue for providing unaffiliated partners an opportunity to educate the Company’s advisors or to support availability and distribution of their products on the Company’s platforms. These payments allow the outside parties to train and support the advisors, explain the features of their products and distribute marketing and educational materials, and support trading and operational systems necessary to enable the Company’s client servicing and production distribution efforts. The Company earns revenue for placing and maintaining unaffiliated fund partners and insurance companies’ products on the Company’s sales platform (subject to the Company’s due diligence standards). The revenue is primarily earned based on a fixed fee or a fixed rate applied, as a percentage, to the market value of assets invested. These performance obligations are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. These fees are invoiced and collected on monthly basis.
Other Products
The Company earns revenue for selling unaffiliated alternative products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment and is earned generally based on a fixed rate applied, as a percentage, to the market value of the investment. The ongoing revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company’s control including market volatility and client behavior (such as how long clients hold their investment). The revenue will not be recognized until it is probable that a significant reversal will not occur.
The Company earns revenue from brokerage clients for the execution of requested trades. The performance obligation is satisfied at the time of trade execution and amounts are received on the settlement date. The revenue varies for each trade based on various factors that include the type of investment, dollar amount of the trade and how the trade is executed (online or broker assisted).
The Company earns revenue for placing clients’ deposits in its brokerage sweep program with third-party banks. The amount received from the third-party banks is impacted by short-term interest rates. The performance obligation with the financial institutions that participate in the sweep program is considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The revenue is earned daily and settled monthly based on a rate applied, as a percentage, to the deposits placed.
Other Revenues
The Company earns revenue from fees charged to franchise advisors for providing various services the advisors need to manage and grow their practices. The primary services include: licensing of intellectual property and software, compliance supervision, insurance coverage, technology services and support, consulting and other services. The services are either provided by the Company or third- party providers. The Company controls the services provided by third parties as it has the right to direct the third parties to perform the services, is primarily responsible for performing the services and sets the prices the advisors are charged. The Company recognizes revenue for the gross amount of the fees received from the advisors. The fees are primarily collected monthly as a reduction of commission payments.
Intellectual property and software licenses, along with compliance supervision, insurance coverage, and technology services and support are primarily earned based on a monthly fixed fee. These services are considered a series of distinct services that are substantially the same and are satisfied each day over the contract term. The consulting and other services performance obligations are satisfied as the services are delivered and revenue is earned based upon the level of service requested.
Receivables
Receivables for revenue from contracts with customers are recognized when the performance obligation is satisfied and the Company has an unconditional right to the revenue. Receivables related to revenues from contracts with customers were $347$350 million and $400 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
5.  Variable Interest Entities
The Company provides asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds and other private funds, property funds and certain non-U.S. series funds (such as OEICs and SICAVs) (collectively, “investment entities”), which are sponsored by the Company. In addition, the Company invests in structured investmentsfinance entities other than CLOs and certain affordable housing partnerships which are considered VIEs. The Company consolidates certain investment entities (collectively, “consolidated investment entities”) if the Company is deemed to be the primary beneficiary. The Company has no obligation to provide financial or other support to the non-consolidated VIEs beyond its initial investment and existing future funding commitments, and the Company has not provided any other support to these entities.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
CLOs
CLOs are asset backed financing entities collateralized by a pool of assets, primarily syndicated loans and, to a lesser extent, high-yield bonds. Multiple tranches of debt securities are issued by a CLO, offering investors various maturity and credit risk characteristics. The debt securities issued by the CLOs are non-recourse to the Company. The CLO’s debt holders have recourse only
21
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
to the assets of the CLO. The assets of the CLOs cannot be used by the Company. Scheduled debt payments are based on the performance of the CLO’s collateral pool. The Company earns management fees from the CLOs based on the value of the CLO’s collateral pool and, in certain instances, may also receive incentive fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company has invested in a portion of the unrated, junior subordinated notes of certain CLOs. The Company consolidates certain CLOs where it is the primary beneficiary and has the power to direct the activities that most significantly impact the economic performance of the CLO.
The Company’s maximum exposure to loss with respect to non-consolidated CLOs is limited to its carrying value, which was $3$2 million and $4 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively. The Company classifies these investments as Available-for-Sale securities. See Note 6 for additional information on these investments.
Property Funds
The Company provides investment advice and related services to property funds some of which are considered VIEs. For investment management services, the Company generally earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not have a significant economic interest and is not required to consolidate any of the property funds. The Company’s maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in property funds is reflected in other investments and was $11$21 million and $12 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
Hedge Funds and other Private Funds
The Company does not consolidate hedge funds and other private funds which are sponsored by the Company and considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services and the Company does not have a significant economic interest in any fund. The Company’s maximum exposure to loss with respect to its investment in these entities is limited to its carrying value. The carrying value of the Company’s investment in these entities is reflected in other investments and was NaN as of both JuneSeptember 30, 2020 and December 31, 2019.
Non-U.S. Series Funds
The Company manages non-U.S. series funds, which are considered VIEs. For investment management services, the Company earns management fees based on the market value of assets under management, and in certain instances may also receive performance-based fees. The fee arrangement is at market and commensurate with the level of effort required to provide those services. The Company does not consolidate these funds and its maximum exposure to loss is limited to its carrying value. The carrying value of the Company’s investment in these funds is reflected in other investments and was $21$24 million and $15 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
Affordable Housing Partnerships and Other Real Estate Partnerships
The Company is a limited partner in affordable housing partnerships that qualify for government-sponsored low income housing tax credit programs and partnerships that invest in multi-family residential properties that were originally developed with an affordable housing component. The Company has determined it is not the primary beneficiary and therefore does not consolidate these partnerships.
A majority of the limited partnerships are VIEs. The Company’s maximum exposure to loss as a result of its investment in the VIEs is limited to the carrying value. The carrying value is reflected in other investments and was $235$202 million and $270 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively. The Company had a $12$9 million and a $15 million liability recorded as of JuneSeptember 30, 2020 and December 31, 2019, respectively, related to original purchase commitments not yet remitted to the VIEs. The Company has not provided any additional support and is not contractually obligated to provide additional support to the VIEs beyond the funding commitments.
Structured Investments
The Company invests in structured investments whichfinance entities that are considered VIEs for which it is not the sponsor. These structured investments typically invest in fixed income instruments and are managed by third parties and include asset backed securities, commercial and residential mortgage backed securities. The Company classifies these investments as Available-for-Sale securities. The Company has determined that it is not the primary beneficiary of these structures due to the size of the Company’s investment in the entities and position in the capital structure of these entities. The Company’s maximum exposure to loss as a result of its
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
investment in these structured investments is limited to its amortized cost. See Note 6 for additional information on these structured investments.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Fair Value of Assets and Liabilities
The Company categorizes its fair value measurements according to a three-level hierarchy. See Note 12 for the definition of the three levels of the fair value hierarchy.
The following tables present the balances of assets and liabilities held by consolidated investment entities measured at fair value on a recurring basis:
June 30, 2020 September 30, 2020
Level 1Level 2Level 3Total Level 1Level 2Level 3Total
(in millions) (in millions)
AssetsAssetsAssets
Investments:Investments:Investments:
Corporate debt securitiesCorporate debt securities$—  $10  $—  $10  Corporate debt securities$— $14 $— $14 
Common stocksCommon stocks— 2 — 2 
Syndicated loansSyndicated loans—  1,274  211  1,485  Syndicated loans— 1,769 118 1,887 
Total investmentsTotal investments—  1,284  211  1,495  Total investments0 1,785 118 1,903 
ReceivablesReceivables—  20  —  20  Receivables— 9 — 9 
Total assets at fair valueTotal assets at fair value$—  $1,304  $211  $1,515  Total assets at fair value$0 $1,794 $118 $1,912 
LiabilitiesLiabilitiesLiabilities
Debt (1)
Debt (1)
$—  $1,489  $—  $1,489  
Debt (1)
$— $1,901 $— $1,901 
Other liabilitiesOther liabilities—  58  —  58  Other liabilities— 220 — 220 
Total liabilities at fair valueTotal liabilities at fair value$—  $1,547  $—  $1,547  Total liabilities at fair value$— $2,121 $— $2,121 
 December 31, 2019
Level 1Level 2Level 3Total
(in millions)
Assets
Investments:
Corporate debt securities$— $8 $— $8 
Common stocks1 — — 1 
Syndicated loans— 1,454 143 1,597 
Total investments1 1,462 143 1,606 
Receivables— 8 — 8 
Total assets at fair value$1 $1,470 $143 $1,614 
Liabilities
Debt (1)
$— $1,628 $— $1,628 
Other liabilities— 84 — 84 
Total liabilities at fair value$— $1,712 $— $1,712 
(1) The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was $1.5$1.9 billion and $1.7 billion as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following tables provide a summary of changes in Level 3 assets held by consolidated investment entities measured at fair value on a recurring basis:
Syndicated Loans Syndicated Loans
(in millions) (in millions)
Balance, April 1, 2020$302  
Balance, July 1, 2020Balance, July 1, 2020$211 
Total gains (losses) included in:Total gains (losses) included in:Total gains (losses) included in:
Net incomeNet income18  (1)Net income2 (1)
PurchasesPurchases2  Purchases35 
SalesSales(8) Sales(12)
SettlementsSettlements(16) Settlements(6)
Transfers into Level 3Transfers into Level 3102  Transfers into Level 329 
Transfers out of Level 3Transfers out of Level 3(189) Transfers out of Level 3(141)
Balance, June 30, 2020$211  
Balance, September 30, 2020Balance, September 30, 2020$118 
Changes in unrealized gains (losses) included in income relating to assets held at June 30, 2020$17  (1)
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2020Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2020$1 (1)
Common StocksSyndicated Loans Common StocksSyndicated Loans
(in millions)(in millions)
Balance, April 1, 2019$—  $117  
Balance, July 1, 2019Balance, July 1, 2019$1 $130 
Total gains (losses) included in:Total gains (losses) included in:Total gains (losses) included in:
Net incomeNet income—  (1) (1)Net income— 0 
PurchasesPurchases—  27  Purchases— 26 
Sales—  (7) 
SettlementsSettlements—  (4) Settlements— (25)
Transfers into Level 3Transfers into Level 31  59  Transfers into Level 3— 81 
Transfers out of Level 3Transfers out of Level 3—  (61) Transfers out of Level 3(1)(77)
Balance, June 30, 2019$1  $130  
Balance, September 30, 2019Balance, September 30, 2019$0 $135 
Changes in unrealized gains (losses) included in income relating to assets held at June 30, 2019$—  $(1) (1)
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2019Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2019$— $(1)(1)
Syndicated Loans Syndicated Loans
(in millions) (in millions)
Balance, January 1, 2020Balance, January 1, 2020$143  Balance, January 1, 2020$143 
Total gains (losses) included in:Total gains (losses) included in:Total gains (losses) included in:
Net incomeNet income(21) (1)Net income(19)(1)
PurchasesPurchases45  Purchases80 
SalesSales(15) Sales(27)
SettlementsSettlements(26) Settlements(32)
Transfers into Level 3Transfers into Level 3350  Transfers into Level 3379 
Transfers out of Level 3Transfers out of Level 3(265) Transfers out of Level 3(406)
Balance, June 30, 2020$211  
Balance, September 30, 2020Balance, September 30, 2020$118 
Changes in unrealized gains (losses) included in income relating to assets held at June 30, 2020$3  (1)
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2020Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2020$(2)(1)
 Common StocksSyndicated Loans
(in millions)
Balance, January 1, 2019$0 $226 
Total gains (losses) included in:
Net income— (1)(1)
Purchases— 75 
Sales— (8)
Settlements— (36)
Transfers into Level 31 165 
Transfers out of Level 3(1)(286)
Balance, September 30, 2019$0 $135 
Changes in unrealized gains (losses) included in income relating to assets held at September 30, 2019$— $(2)(1)

(1) Included in net investment income in the Consolidated Statements of Operations.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
 Common StocksSyndicated Loans
(in millions)
Balance, January 1, 2019$—  $226  
Total gains (losses) included in:
Net income—  (1) (1)
Purchases—  49  
Sales—  (8) 
Settlements—  (11) 
Transfers into Level 31  84  
Transfers out of Level 3—  (209) 
Balance, June 30, 2019$1  $130  
Changes in unrealized gains (losses) included in income relating to assets held at June 30, 2019$—  $(1) (1)
(1) Included in net investment income in the Consolidated Statements of Operations.
Securities and loans transferred from Level 3 primarily represent assets with fair values that are now obtained from a third-party pricing service with observable inputs or priced in active markets. Securities and loans transferred to Level 3 represent assets with fair values that are now based on a single non-binding broker quote.
All Level 3 measurements as of JuneSeptember 30, 2020 and December 31, 2019 were obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.
Determination of Fair Value
Assets
Investments
The fair value of syndicated loans obtained from third-party pricing services using a market approach with observable inputs is classified as Level 2. The fair value of syndicated loans obtained from third-party pricing services with a single non-binding broker quote as the underlying valuation source is classified as Level 3. The underlying inputs used in non-binding broker quotes are not readily available to the Company. See Note 12 for a description of the Company’s determination of the fair value of corporate debt securities, common stocks and other investments.
Receivables
For receivables of the consolidated CLOs, the carrying value approximates fair value as the nature of these assets has historically been short term and the receivables have been collectible. The fair value of these receivables is classified as Level 2.
Liabilities
Debt
The fair value of the CLOs’ assets, typically syndicated bank loans, is more observable than the fair value of the CLOs’ debt tranches for which market activity is limited and less transparent. As a result, the fair value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets and is classified as Level 2.
Other Liabilities
Other liabilities consist primarily of securities purchased but not yet settled held by consolidated CLOs. The carrying value approximates fair value as the nature of these liabilities has historically been short term. The fair value of these liabilities is classified as Level 2.
Fair Value Option
The Company has elected the fair value option for the financial assets and liabilities of the consolidated CLOs. Management believes that the use of the fair value option better matches the changes in fair value of assets and liabilities related to the CLOs.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following table presents the fair value and unpaid principal balance of loans and debt for which the fair value option has been elected:
June 30, 2020December 31, 2019 September 30, 2020December 31, 2019
(in millions) (in millions)
Syndicated loansSyndicated loansSyndicated loans
Unpaid principal balanceUnpaid principal balance$1,655  $1,678  Unpaid principal balance$2,005 $1,678 
Excess unpaid principal over fair valueExcess unpaid principal over fair value(170) (81) Excess unpaid principal over fair value(118)(81)
Fair valueFair value$1,485  $1,597  Fair value$1,887 $1,597 
Fair value of loans more than 90 days past dueFair value of loans more than 90 days past due$12  $4  Fair value of loans more than 90 days past due$4 $4 
Fair value of loans in nonaccrual statusFair value of loans in nonaccrual status32  42  Fair value of loans in nonaccrual status22 42 
Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or bothDifference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both48  18  Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both30 18 
DebtDebtDebt
Unpaid principal balanceUnpaid principal balance$1,723  $1,761  Unpaid principal balance$2,089 $1,761 
Excess unpaid principal over fair valueExcess unpaid principal over fair value(234) (133) Excess unpaid principal over fair value(188)(133)
Carrying value (1)
Carrying value (1)
$1,489  $1,628  
Carrying value (1)
$1,901 $1,628 
(1) The carrying value of the CLOs’ debt is set equal to the fair value of the CLOs’ assets. The estimated fair value of the CLOs’ debt was $1.5$1.9 billion and $1.7 billion as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
During the third quarter of 2020, the Company launched a new CLO and issued debt of $394 million.
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Interest income from syndicated loans, bonds and structured investments is recorded based on contractual rates in net investment income. Gains and losses related to changes in the fair value of investments and gains and losses on sales of investments are also recorded in net investment income. Interest expense on debt is recorded in interest and debt expense with gains and losses related to changes in the fair value of debt recorded in net investment income.
Total net gains (losses) recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $(7)$20 million and $(1)$(3) million for the three months ended JuneSeptember 30, 2020 and 2019, respectively.
Total net gains (losses) recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $(13)$7 million and $(5)$(8) million for the sixnine months ended JuneSeptember 30, 2020 and 2019, respectively.
Debt of the consolidated investment entities and the stated interest rates were as follows:
 Carrying ValueWeighted Average
Interest Rate
June 30, 2020December 31, 2019June 30, 2020December 31, 2019
(in millions) 
Debt of consolidated CLOs due 2025-2030$1,489  $1,628  2.5 %3.5 %
 Carrying ValueWeighted Average Interest Rate
September 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions) 
Debt of consolidated CLOs due 2025-2031$1,901 $1,628 2.1 %3.5 %
The debt of the consolidated CLOs has both fixed and floating interest rates, which range from 0.0% to 9.6%8.9%. The interest rates on the debt of CLOs are weighted average rates based on the outstanding principal and contractual interest rates.
6.  Investments
The following is a summary of Ameriprise Financial investments:June 30, 2020December 31, 2019
(in millions)
Available-for-Sale securities, at fair value (net of allowance for credit losses: 2020, $14)$34,442  $33,129  
Mortgage loans, net (net of allowance for credit losses: 2020, $28; 2019, $19)2,809  2,778  
Policy loans856  868  
Other investments (net of allowance for credit losses: 2020, $14; 2019, $5)1,101  1,140  
Total$39,208  $37,915  
The following is a summary of Ameriprise Financial investments:
September 30, 2020December 31, 2019
(in millions)
Available-for-Sale securities, at fair value (net of allowance for credit losses: 2020, $14)$35,959 $33,129 
Mortgage loans, net (net of allowance for credit losses: 2020, $29; 2019, $19)2,770 2,778 
Policy loans849 868 
Other investments (net of allowance for credit losses: 2020, $13; 2019, $5)1,159 1,140 
Total$40,737 $37,915 
Other investments primarily reflect the Company’s interests in affordable housing partnerships, trading securities, seed money investments, syndicated loans, credit card receivables and certificates of deposit with original or remaining maturities at the time of purchase of more than 90 days.
The following is a summary of net investment income:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in millions)
Investment income on fixed maturities$275 $349 $887 $1,046 
Net realized gains (losses)4 (1)(10)(18)(1)(6)
Affordable housing partnerships(14)(26)(50)(58)
Other13 19 58 67 
Consolidated investment entities22 24 56 72 
Total$300 $356 $933 $1,121 
(1) Includes the change in the allowance for credit losses of $(2) million and $(30) million for the three months and nine months ended September 30, 2020, respectively.
25
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
 The following is a summary of net investment income:Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(in millions)
Investment income on fixed maturities$290  $344  $612  $697  
Net realized gains (losses)(3) (1)—  (22) (1)4  
Affordable housing partnerships(22) (17) (36) (32) 
Other23  16  45  48  
Consolidated investment entities17  25  34  48  
Total$305  $368  $633  $765  
Available-for-Sale securities distributed by type were as follows:
(1) Includes the change in the allowance for credit losses of $(4) million and $(28) million for the three months and six months ended June 30, 2020, respectively.
September 30, 2020
Description of SecuritiesAmortized CostGross Unrealized GainsGross Unrealized LossesAllowance for Credit LossesFair Value
 (in millions)
Corporate debt securities$11,402 $1,667 $(34)$(13)$13,022 
Residential mortgage backed securities10,071 194 (7)— 10,258 
Commercial mortgage backed securities6,016 235 (39)— 6,212 
Asset backed securities3,053 48 (12)(1)3,088 
State and municipal obligations1,091 290 (1)— 1,380 
U.S. government and agency obligations1,680 0 — — 1,680 
Foreign government bonds and obligations250 19 (2)— 267 
Other securities51 1 — — 52 
Total$33,614 $2,454 $(95)$(14)$35,959 
Available-for-Sale securities distributed by type were as follows:June 30, 2020
Description of SecuritiesAmortized CostGross
Unrealized Gains		Gross
Unrealized Losses		Allowance for Credit LossesFair Value
 (in millions)
Corporate debt securities$11,197  $1,549  $(36) $(13) $12,697  
Residential mortgage backed securities9,783  185  (12) —  9,956  
Commercial mortgage backed securities5,731  205  (56) —  5,880  
Asset backed securities2,800  42  (28) (1) 2,813  
State and municipal obligations1,092  275  (2) —  1,365  
U.S. government and agency obligations1,464  1  —  —  1,465  
Foreign government bonds and obligations251  18  (3) —  266  
Total$32,318  $2,275  $(137) $(14) $34,442  
Description of SecuritiesDescription of SecuritiesDecember 31, 2019Description of SecuritiesDecember 31, 2019
Amortized CostGross
Unrealized Gains		Gross
Unrealized Losses		Fair ValueDescription of SecuritiesAmortized CostGross Unrealized GainsFair Value
(in millions) (in millions)
Corporate debt securitiesCorporate debt securities$10,847  $1,344  $(4) $12,187  Corporate debt securities$10,847 $1,344 $(4)$12,187 
Residential mortgage backed securitiesResidential mortgage backed securities9,954  94  (19) 10,029  Residential mortgage backed securities9,954 94 (19)10,029 
Commercial mortgage backed securitiesCommercial mortgage backed securities5,473  96  (6) 5,563  Commercial mortgage backed securities5,473 96 (6)5,563 
Asset backed securitiesAsset backed securities1,968  42  (4) 2,006  Asset backed securities1,968 42 (4)2,006 
State and municipal obligationsState and municipal obligations1,131  238  (2) 1,367  State and municipal obligations1,131 238 (2)1,367 
U.S. government and agency obligationsU.S. government and agency obligations1,679  1  —  1,680  U.S. government and agency obligations1,679 1 0 1,680 
Foreign government bonds and obligationsForeign government bonds and obligations254  19  (2) 271  Foreign government bonds and obligations254 19 (2)271 
Other securitiesOther securities26  —  —  26  Other securities26 — — 26 
TotalTotal$31,332  $1,834  $(37) $33,129  Total$31,332 $1,834 $(37)$33,129 
As of both JuneSeptember 30, 2020 and December 31, 2019, accrued interest of $190 million and $177 million, respectively, is excluded from the amortized cost basis of Available-for-Sale securities in the tables above and is recorded in receivables on the Consolidated Balance Sheets.
As of JuneSeptember 30, 2020 and December 31, 2019, investment securities with a fair value of $2.8$3.8 billion and $2.2 billion, respectively, were pledged to meet contractual obligations under derivative contracts and short-term borrowings, of which $426$483 million and $576 million, respectively, may be sold, pledged or rehypothecated by the counterparty.
As of JuneSeptember 30, 2020 and December 31, 2019, fixed maturity securities comprised approximately 88% and 87%, respectively, of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or, if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. As of JuneSeptember 30, 2020 and December 31, 2019, the Company’s internal analysts rated $614$706 million and $624 million, respectively, of securities using criteria similar to those used by NRSROs.
2627
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
A summary of fixed maturity securities by rating was as follows:
RatingsRatingsJune 30, 2020December 31, 2019RatingsSeptember 30, 2020December 31, 2019
Amortized CostFair ValuePercent of Total Fair ValueAmortized CostFair ValuePercent of Total Fair ValueRatingsAmortized CostFair ValuePercent of Total Fair ValueAmortized CostFair ValuePercent of Total Fair Value
(in millions, except percentages) (in millions, except percentages)
AAAAAA$18,997  $19,324  56 %$18,256  $18,437  56 %AAA$20,156 $20,563 57 %$18,256 $18,437 56 %
AAAA1,080  1,311  4  1,113  1,304  4  AA1,120 1,359 4 1,113 1,304 4 
AA3,185  3,724  11  3,008  3,474  10  A2,905 3,459 9 3,008 3,474 10 
BBBBBB7,865  8,870  26  8,178  9,102  28  BBB7,841 8,923 25 8,178 9,102 28 
Below investment grade (1)
Below investment grade (1)
1,191  1,213  3  777  812  2  
Below investment grade (1)
1,592 1,655 5 777 812 2 
Total fixed maturitiesTotal fixed maturities$32,318  $34,442  100 %$31,332  $33,129  100 %Total fixed maturities$33,614 $35,959 100 %$31,332 $33,129 100 %
(1) The amortized cost and fair value of below investment grade securities includes interest in CLOs managed by the Company of $4 million and $3$2 million, respectively, as of JuneSeptember 30, 2020, and $5 million and $6 million, respectively, as of December 31, 2019. These securities are not rated but are included in below investment grade due to their risk characteristics.
As of JuneSeptember 30, 2020 and December 31, 2019, approximately 39%34% and 45%, respectively, of securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. NaN holdings of any issuer were greater than 10% of total equity.
The following tables provide information about Available-for-Sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position:
Description of SecuritiesDescription of SecuritiesJune 30, 2020Description of SecuritiesSeptember 30, 2020
Less than 12 months12 months or moreTotalDescription of SecuritiesLess than 12 months12 months or moreTotal
Number of SecuritiesFair Value
Unrealized Losses (1)
Number of SecuritiesFair Value
Unrealized Losses (1)
Number of SecuritiesFair Value
Unrealized Losses (1)
Description of SecuritiesNumber of SecuritiesFair ValueUnrealized LossesNumber of SecuritiesFair ValueUnrealized LossesFair ValueUnrealized Losses
(in millions, except number of securities) (in millions, except number of securities)
Corporate debt securitiesCorporate debt securities65  $407  $(40) 10  $40  $(9) 75  $447  $(49) Corporate debt securities76 $$(29)16 $24 $(5)92 $841 $(34)
Residential mortgage backed securitiesResidential mortgage backed securities133  1,774  (8) 87  800  (4) 220  2,574  (12) Residential mortgage backed securities93 1,677 (5)73 434 (2)166 2,111 (7)
Commercial mortgage backed securitiesCommercial mortgage backed securities50  1,433  (54) 9  140  (2) 59  1,573  (56) Commercial mortgage backed securities49 1,190 (24)18 326 (15)67 1,516 (39)
Asset backed securitiesAsset backed securities79  1,308  (25) 10  171  (4) 89  1,479  (29) Asset backed securities53 932 (8)11 184 (4)64 1,116 (12)
State and municipal obligationsState and municipal obligations4  55  (2) 1  4  —  5  59  (2) State and municipal obligations4 14 (1)1 4 0 5 18 (1)
Foreign government bonds and obligationsForeign government bonds and obligations6  22  (1) 9  10  (2) 15  32  (3) Foreign government bonds and obligations6 25 (1)10 10 (1)16 35 (2)
TotalTotal337  $4,999  $(130) 126  $1,165  $(21) 463  $6,164  $(151) Total281 $4,655 $(68)129 $982 $(27)410 $5,637 $(95)
(1) Unrealized losses of $14 million due to credit-related factors is recorded in the allowance for credit losses as of June 30, 2020.
Description of SecuritiesDecember 31, 2019
Less than 12 months12 months or moreTotal
Number of SecuritiesFair ValueUnrealized LossesNumber of SecuritiesFair ValueUnrealized LossesNumber of SecuritiesFair ValueUnrealized Losses
 (in millions, except number of securities)
Corporate debt securities13 $66 $(1)23 $173 $(3)36 $239 $(4)
Residential mortgage backed securities150 4,328 (10)118 1,164 (9)268 5,492 (19)
Commercial mortgage backed securities52 1,622 (3)31 314 (3)83 1,936 (6)
Asset backed securities34 598 (3)16 213 (1)50 811 (4)
State and municipal obligations5 23 0 4 57 (2)9 80 (2)
Foreign government bonds and obligations1 0 0 10 15 (2)11 15 (2)
Total255 $6,637 $(17)202 $1,936 $(20)457 $8,573 $(37)
Description of SecuritiesDecember 31, 2019
Less than 12 months12 months or moreTotal
Number of SecuritiesFair ValueUnrealized LossesNumber of SecuritiesFair ValueUnrealized LossesNumber of SecuritiesFair ValueUnrealized Losses
 (in millions, except number of securities)
Corporate debt securities13  $66  $(1) 23  $173  $(3) 36  $239  $(4) 
Residential mortgage backed securities150  4,328  (10) 118  1,164  (9) 268  5,492  (19) 
Commercial mortgage backed securities52  1,622  (3) 31  314  (3) 83  1,936  (6) 
Asset backed securities34  598  (3) 16  213  (1) 50  811  (4) 
State and municipal obligations5  23  —  4  57  (2) 9  80  (2) 
Foreign government bonds and obligations1  —  —  10  15  (2) 11  15  (2) 
Total255  $6,637  $(17) 202  $1,936  $(20) 457  $8,573  $(37) 
28
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
As part of the Company’s ongoing monitoring process, management determined that the change in gross unrealized losses on its Available-for-Sale securities during the sixnine months ended JuneSeptember 30, 2020 is primarily attributable to wider credit spreads, partially offset by lower interest rates. Consistent with the accounting policy described in Note 2, the Company did not recognize these
27
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
unrealized losses in earnings because it was determined that such losses were due to non-credit factors. The Company does not intend to sell these securities and does not believe that it is more likely than not that the Company will be required to sell these securities before the anticipated recovery of the remaining amortized cost basis. As of JuneSeptember 30, 2020, 85%81% of the total of Available-for-Sale securities with gross unrealized losses were considered investment grade.
The following tables present a rollforward of the allowance for credit losses on Available-for-Sale securities:
Corporate Debt SecuritiesAsset Back SecuritiesTotalCorporate Debt SecuritiesAsset Backed SecuritiesTotal
(in millions)(in millions)
Balance, April 1, 2020$13  $—  $13  
Balance, July 1, 2020Balance, July 1, 2020$13$1$14
Additions for which credit losses were not previously recordedAdditions for which credit losses were not previously recorded—  —  —  Additions for which credit losses were not previously recorded000
Additional increases (decreases) on securities that had an allowance recorded in a previous periodAdditional increases (decreases) on securities that had an allowance recorded in a previous period—  1  1  Additional increases (decreases) on securities that had an allowance recorded in a previous period—00
Balance, June 30, 2020$13  $1  $14  
Balance, September 30, 2020Balance, September 30, 2020$13$1$14
Corporate Debt SecuritiesAsset Back SecuritiesTotalCorporate Debt SecuritiesAsset Backed SecuritiesTotal
(in millions)(in millions)
Balance, January 1, 2020 (1)
Balance, January 1, 2020 (1)
$—  $—  $—  
Balance, January 1, 2020 (1)
$0$0$
Additions for which credit losses were not previously recordedAdditions for which credit losses were not previously recorded13  —  13  Additions for which credit losses were not previously recorded13013
Additional increases (decreases) on securities that had an allowance recorded in a previous periodAdditional increases (decreases) on securities that had an allowance recorded in a previous period—  1  1  Additional increases (decreases) on securities that had an allowance recorded in a previous period—11
Balance, June 30, 2020$13  $1  $14  
Balance, September 30, 2020Balance, September 30, 2020$13$1$14
(1) Prior to January 1, 2020, credit losses on Available-for-Sale securities were not recorded in an allowance but were recorded as a reduction of the book value of the security if the security was other-than-temporarily impaired. There is no adoption impact due to the prospective transition for Available-for-Sale securities.
Net realized gains and losses on Available-for-Sale securities, determined using the specific identification method, recognized in net investment income were as follows:
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2020201920202019
(in millions) (in millions)
Gross realized investment gainsGross realized investment gains$5  $3  $13  $22  Gross realized investment gains$4$6$17$
Gross realized investment lossesGross realized investment losses—  (3) (3) (12) Gross realized investment losses—(1)(3)(13)
Credit lossesCredit losses(1) —  (14) (5) Credit losses—(15)(14)(20)
TotalTotal$4  $—  $(4) $5  Total$4$(10)$—$(5)
Credit losses for the three months and sixnine months ended JuneSeptember 30, 2020 primarily related to recording an allowance for credit losses on certain corporate debt securities, primarily in the oil and gas industry. The Company recognized an impairment of $5 million in the first quarter of 2019 on investments held by Ameriprise Auto & Home Insurance (“AAH”) as the Company no longer intended to hold the securities until the recovery of fair value to book value.
See Note 15 for a rollforward of net unrealized investment gains (losses) included in AOCI.
Available-for-Sale securities by contractual maturity as of June 30, 2020 were as follows:
Amortized CostFair Value
(in millions)
Due within one year$2,759  $2,774  
Due after one year through five years5,007  5,290  
Due after five years through 10 years2,273  2,545  
Due after 10 years3,965  5,184  
 14,004  15,793  
Residential mortgage backed securities9,783  9,956  
Commercial mortgage backed securities5,731  5,880  
Asset backed securities2,800  2,813  
Total$32,318  $34,442  
2829
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Available-for-Sale securities by contractual maturity as of September 30, 2020 were as follows:
Amortized CostFair Value
(in millions)
Due within one year$2,998$3,013
Due after one year through five years4,8455,150
Due after five years through 10 years2,5332,814
Due after 10 years4,0985,424
 14,47416,401
Residential mortgage backed securities10,07110,258
Commercial mortgage backed securities6,0166,212
Asset backed securities3,0533,088
Total$33,614$35,959
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Residential mortgage backed securities, commercial mortgage backed securities and asset backed securities are not due at a single maturity date. As such, these securities were not included in the maturities distribution.
7.  Financing Receivables
Financing receivables are comprised of commercial loans, consumer loans, and the deposit receivable. See Note 2 for information regarding the Company’s accounting policies related to financing receivables and the allowance for credit losses.
Allowance for Credit Losses
The following tables present a rollforward of the allowance for credit losses for the sixnine months ended JuneSeptember 30:
Commercial LoansConsumer LoansTotal Commercial LoansConsumer LoansTotal
(in millions) (in millions)
Balance, December 31, 2019 (1)
Balance, December 31, 2019 (1)
$51  $—  $51  
Balance, December 31, 2019 (1)
$51 $0 $
Cumulative effect of adoption of current expected credit losses guidanceCumulative effect of adoption of current expected credit losses guidance2  3  5  Cumulative effect of adoption of current expected credit losses guidance2 3 5 
Balance, January 1, 2020Balance, January 1, 202053  3  56  Balance, January 1, 202053 3 56 
ProvisionsProvisions13  3  16  Provisions16 3 19 
Charge-offsCharge-offs(1) (2) (3) Charge-offs(2)(2)(4)
Recoveries—  —  —  
Balance, June 30, 2020$65  $4  $69  
Balance, September 30, 2020Balance, September 30, 2020$67 $4 $71 
(1) Prior to January 1, 2020, the allowance for credit losses was based on an incurred loss model that did not require estimating expected credit losses over the expected life of the asset.
 Commercial Loans
(in millions)
Balance, January 1, 2019$49 
Provisions26 
Charge-offs(1)(2)
Balance, JuneSeptember 30, 2019$5053 
Accrued interest on commercial loans was $13$17 million and $14 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively, and is recorded in receivables on the Consolidated Balance Sheets and excluded from the amortized cost basis of commercial loans.
Purchases and Sales
During the three months ended JuneSeptember 30, 2020 and 2019, the Company purchased $13$96 million and $41$52 million, respectively, of syndicated loans, and sold NaN$5 million and $14$13 million, respectively, of syndicated loans. During the sixnine months ended JuneSeptember 30, 2020 and 2019, the Company purchased $69$165 million and $74$126 million, respectively, of syndicated loans, and sold $7$12 million and $27$40 million, respectively, of syndicated loans.
During both the three months and sixended September 30, 2020, the Company purchased NaN of residential mortgage loans. During the nine months ended JuneSeptember 30, 2020, the Company purchased $22 million of residential mortgage loans from a third-party originator shortly after origination. The allowance for credit losses for residential mortgage loans was not material as of JuneSeptember 30, 2020.
The Company has not acquired any loans with deteriorated credit quality as of the acquisition date.
30
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Credit Quality Information
Nonperforming loans were $29$24 million and $25 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively. All other loans were considered to be performing.
Commercial Loans
Commercial Mortgage Loans
The Company reviews the credit worthiness of the borrower and the performance of the underlying properties in order to determine the risk of loss on commercial mortgage loans. Loan-to-value ratio is the primary credit quality indicator included in this review. Total commercial mortgage loans past due were $6 million and NaN as of both JuneSeptember 30, 2020 and December 31, 2019.2019, respectively.
Based on this review, the commercial mortgage loans are assigned an internal risk rating, which management updates as necessary. Commercial mortgage loans which management has assigned its highest risk rating were less than 1% of total commercial mortgage loans as of both JuneSeptember 30, 2020 and December 31, 2019. Loans with the highest risk rating represent distressed loans which the
29
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. As of June 30, 2020,Total commercial mortgage loan modifications in 2020 due to the COVID-19 pandemic consisted of 93 loans with a total unpaid balance of $369 million. Modifications primarily consisted of short-term forbearance and interest only payments. As of September 30, 2020, there were 25 loans remaining with a total unpaid balance of $127 million. All other loans returned to their normal payment schedules.
The table below presents the amortized cost basis of commercial mortgage loans as of JuneSeptember 30, 2020 by year of origination and loan-to-value ratio:
Loan-to-Value Ratio20202019201820172016PriorTotal
(in millions)
> 100%$—  $—  $3  $—  $—  $10  $13  
80% - 100%15  5  12  3  5  21  61  
60% - 80%70  185  27  32  56  159  529  
40% - 60%13  51  78  162  109  595  1,008  
< 40%6  25  78  99  65  932  1,205  
Total$104  $266  $198  $296  $235  $1,717  $2,816  

Loan-to-Value Ratio20202019201820172016PriorTotal
(in millions)
> 100%$0 $0 $3 $0 $0 $10 $13 
80% - 100%15 15 12 3 5 21 71 
60% - 80%82 175 27 32 55 157 528 
40% - 60%13 50 74 160 108 571 976 
< 40%7 24 81 98 65 915 1,190 
Total$117 $264 $197 $293 $233 $1,674 $2,778 
Loan-to-value ratio is based on income and expense data provided by borrowers at least annually and long-term capitalcapitalization rate assumptions based on property type.
In addition, the Company reviews the concentrations of credit risk by region and property type. Concentrations of credit risk of commercial mortgage loans by U.S. region were as follows:
LoansPercentage LoansPercentage
June 30, 2020December 31, 2019June 30, 2020December 31, 2019 September 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions)   (in millions)  
East North CentralEast North Central$249  $239  9 %9 %East North Central$259 $9 %9 %
East South CentralEast South Central120  121  4  4  East South Central119 121 4 4 
Middle AtlanticMiddle Atlantic188  182  7  6  Middle Atlantic186 182 7 6 
MountainMountain248  251  9  9  Mountain245 251 9 9 
New EnglandNew England55  54  2  2  New England55 54 2 2 
PacificPacific839  831  30  30  Pacific829 831 30 30 
South AtlanticSouth Atlantic729  723  26  26  South Atlantic707 723 26 26 
West North CentralWest North Central210  214  7  8  West North Central202 214 7 8 
West South CentralWest South Central178  182  6  6  West South Central176 182 6 6 
2,816  2,797  100 %100 % 2,778 2,797 100 %100 %
Less: allowance for credit lossesLess: allowance for credit losses28  19    Less: allowance for credit losses29 19   
TotalTotal$2,788  $2,778    Total$2,749 $2,778   
31
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Concentrations of credit risk of commercial mortgage loans by property type were as follows:
 LoansPercentage
June 30, 2020December 31, 2019June 30, 2020December 31, 2019
(in millions)  
Apartments$719  $692  26 %25 %
Hotel50  51  2  2  
Industrial439  429  16  15  
Mixed use89  78  3  3  
Office402  419  14  15  
Retail912  931  32  33  
Other205  197  7  7  
 2,816  2,797  100 %100 %
Less: allowance for credit losses28  19    
Total$2,788  $2,778    

30
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
 LoansPercentage
September 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions)  
Apartments$717 $692 26 %25 %
Hotel50 51 2 2 
Industrial434 429 16 15 
Mixed use88 78 3 3 
Office392 419 14 15 
Retail898 931 32 33 
Other199 197 7 7 
 2,778 2,797 100 %100 %
Less: allowance for credit losses29 19   
Total$2,749 $2,778   
Syndicated Loans
The recorded investment in syndicated loans as of JuneSeptember 30, 2020 and December 31, 2019 was $553$627 million and $543 million, respectively. The Company’s syndicated loan portfolio is diversified across industries and issuers. Total syndicated loans past due were NaN$6 million and $1 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively. The Company assigns an internal risk rating to each syndicated loan in its portfolio ranging from 1 through 5, with 5 reflecting the lowest quality.
The table below presents the amortized cost basis of syndicated loans as of JuneSeptember 30, 2020 by origination year and internal risk rating:
Internal Risk RatingInternal Risk Rating20202019201820172016PriorTotalInternal Risk Rating20202019201820172016PriorTotal
(in millions)Internal Risk Rating(in millions)
Risk 5Risk 5$—  $—  $1  $—  $—  $—  $1  Risk 5$0 $0 $1 $0 $0 $0 $1 
Risk 4Risk 4—  7  4  9  2  7  29  Risk 40 4 4 9 2 10 29 
Risk 3Risk 34  9  11  27  10  19  80  Risk 30 4 9 28 13 26 80 
Risk 2Risk 211  43  57  53  21  56  241  Risk 220 53 65 71 21 47 277 
Risk 1Risk 19  27  50  59  18  39  202  Risk 121 39 58 59 23 40 240 
TotalTotal$24  $86  $123  $148  $51  $121  $553  Total$41 $100 $137 $167 $59 $123 $627 
Financial Advisor Loans
The Company offers loans to financial advisors for transitional cost assistance. Repayment of the loan is highly dependent on the retention of the financial advisor. In the event a financial advisor is no longer affiliated with the Company, any unpaid balances become immediately due. Accordingly, the primary risk factor for advisor loans is termination status. The allowance for credit losses related to loans to advisors that have terminated their relationship with the Company was $10 million as of both JuneSeptember 30, 2020 and December 31, 2019.
The table below presents the amortized cost basis of advisor loans as of JuneSeptember 30, 2020 by origination year and termination status:
Termination StatusTermination Status20202019201820172016PriorTotalTermination Status20202019201820172016PriorTotal
(in millions)Termination Status(in millions)
ActiveActive$82  $145  $107  $132  $88  $102  $656  Active$124 $141 $104 $130 $86 $95 $680 
TerminatedTerminated—  1  —  1  2  12  16  Terminated0 0 0 1 2 10 13 
TotalTotal$82  $146  $107  $133  $90  $114  $672  Total$124 $141 $104 $131 $88 $105 $693 
Consumer Loans
Credit Card Receivables
The credit cards are co-branded with Ameriprise Financial, Inc. and issued to the Company’s customers by a third party. FICO scores and delinquency rates are the primary credit quality indicators for the credit card portfolio. Delinquency rates are measured as based on the number of days past due. Credit card receivables over 30 days past due were 1% and 2% as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
32
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The table below presents the amortized cost basis of credit card receivables by FICO score as of JuneSeptember 30, 2020:
Total
(in millions)
> 800$2425 
750 - 7992022 
700 - 7492425 
650 - 6991514 
< 65065 
Total$8991 
Policy Loans
Policy loans do not exceed the cash surrender value at origination. As there is minimal risk of loss related to policy loans, the Company does not record anthere is no allowance for credit losses.
Margin Loans
The Company monitors collateral supporting margin loans and requests additional collateral when necessary in order to mitigate the risk of loss. As of both JuneSeptember 30, 2020 and December 31, 2019, the allowance for credit losses on margin loans was not material.
31
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Deposit Receivable
The deposit receivable was $1.4 billion and $1.5 billion as of both JuneSeptember 30, 2020 and December 31, 2019.2019, respectively. The deposit receivable is fully collateralized by the fair value of the assets held in a trust. Based on management’s evaluation of the nature of the underlying assets and the potential for changes in the collateral value, the Company did not have an allowance for credit losses for the deposit receivable as of both JuneSeptember 30, 2020 and December 31, 2019.
Troubled Debt Restructurings
The recorded investment in restructured loans was not material as of both JuneSeptember 30, 2020 and December 31, 2019. There were no0 loans accounted for as a troubled debt restructuring by the Company during botheach of the three months and sixnine months ended JuneSeptember 30, 2020 and 2019. The loan modifications granted during the three months ended June 30, 2020 are related to the COVID-19 pandemic and as such did not meet the definition of troubled debt restructurings. There are 0 commitments to lend additional funds to borrowers whose loans have been restructured.
8.  Deferred Acquisition Costs and Deferred Sales Inducement Costs
During the third quarter of the year, management updated market-related inputs and implemented model changes related to the living benefit valuation. In addition, management conducted its annual review of life insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. The impact of unlocking to DAC in both the third quarter of 2020 and 2019 primarily reflected an unfavorable impact from updates to interest rate assumptions, partially offset by a favorable impact from lower surrenders on variable annuities with living benefit guarantees.
The balances of and changes in DAC were as follows:
2020201920202019
(in millions)(in millions)
Balance at January 1Balance at January 1$2,698  $2,776  Balance at January 1$2,698 $
Capitalization of acquisition costsCapitalization of acquisition costs108  150  Capitalization of acquisition costs162 226 
AmortizationAmortization(264) (74) Amortization(249)(172)
Amortization, impact of valuation assumptions reviewAmortization, impact of valuation assumptions review(100)(14)
Impact of change in net unrealized (gains) losses on securitiesImpact of change in net unrealized (gains) losses on securities(43) (123) Impact of change in net unrealized (gains) losses on securities(61)(175)
Reclassified to assets held for sale (1)
Reclassified to assets held for sale (1)
—  (16) 
Reclassified to assets held for sale (1)
0 (15)
Balance at June 30$2,499  $2,713  
Balance at September 30Balance at September 30$2,450 $2,626 
(1) On April 2, 2019, the Company announced it signed a definitive agreement with a subsidiary of American Family Mutual Holding Company (American Family Insurance) for the sale of AAH, a business unit of Ameriprise Financial. The Company met the requirements to classify assets related to AAH as held for sale as of June 30, 2019.
33
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The balances of and changes in DSIC, which is included in other assets, were as follows:
2020201920202019
(in millions)(in millions)
Balance at January 1Balance at January 1$218  $251  Balance at January 1$218 $
Capitalization of sales inducement costsCapitalization of sales inducement costs1  1  Capitalization of sales inducement costs1 1 
AmortizationAmortization(18) (6) Amortization(19)(13)
Amortization, impact of valuation assumptions reviewAmortization, impact of valuation assumptions review(16)0 
Impact of change in net unrealized (gains) losses on securitiesImpact of change in net unrealized (gains) losses on securities(5) (19) Impact of change in net unrealized (gains) losses on securities(1)(21)
Balance at June 30$196  $227  
Balance at September 30Balance at September 30$183 $218 
32
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
9.  Policyholder Account Balances, Future Policy Benefits and Claims and Separate Account Liabilities
Policyholder account balances, future policy benefits and claims consisted of the following:


June 30, 2020December 31, 2019

September 30, 2020December 31, 2019
(in millions)

(in millions)
Policyholder account balancesPolicyholder account balancesPolicyholder account balances
Fixed annuities (1)
Fixed annuities (1)
$8,710  $8,909  
Fixed annuities (1)
$8,623 $8,909 
Variable annuity fixed sub-accountsVariable annuity fixed sub-accounts5,100  5,103  Variable annuity fixed sub-accounts5,105 5,103 
Universal life (“UL”)/variable universal life (“VUL”) insuranceUniversal life (“UL”)/variable universal life (“VUL”) insurance3,121  3,110  Universal life (“UL”)/variable universal life (“VUL”) insurance3,117 3,110 
Indexed universal life (“IUL”) insuranceIndexed universal life (“IUL”) insurance2,125  2,025  Indexed universal life (“IUL”) insurance2,189 2,025 
Structured variable annuitiesStructured variable annuities820 0 
Other life insuranceOther life insurance627  646  Other life insurance616 646 
Total policyholder account balancesTotal policyholder account balances19,683  19,793  Total policyholder account balances20,470 19,793 
Future policy benefitsFuture policy benefitsFuture policy benefits
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)3,849  1,462  Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)3,681 1,462 
Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)
Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)
30  (39) 
Variable annuity guaranteed minimum accumulation benefits (“GMAB”) (2)
24 (39)
Other annuity liabilitiesOther annuity liabilities566  139  Other annuity liabilities183 139 
Fixed annuity life contingent liabilitiesFixed annuity life contingent liabilities1,412  1,444  Fixed annuity life contingent liabilities1,389 1,444 
Life and disability income insuranceLife and disability income insurance1,194  1,212  Life and disability income insurance1,191 1,212 
Long term care insuranceLong term care insurance5,304  5,302  Long term care insurance5,668 5,302 
UL/VUL and other life insurance additional liabilitiesUL/VUL and other life insurance additional liabilities1,080  1,033  UL/VUL and other life insurance additional liabilities1,228 1,033 
Total future policy benefitsTotal future policy benefits13,435  10,553  Total future policy benefits13,364 10,553 
Policy claims and other policyholders’ fundsPolicy claims and other policyholders’ funds194  166  Policy claims and other policyholders’ funds186 166 
Total policyholder account balances, future policy benefits and claimsTotal policyholder account balances, future policy benefits and claims$33,312  $30,512  Total policyholder account balances, future policy benefits and claims$34,020 $30,512 
(1) Includes fixed deferred annuities, non-life contingent fixed payout annuities and fixed deferred indexed annuity host contracts.
(2) Includes the fair value of GMAB embedded derivatives that was a net asset as of December 31, 2019 reported as a contra liability. 
Separate account liabilities consisted of the following:
June 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions)(in millions)
Variable annuityVariable annuity$71,990  $74,965  Variable annuity$73,919 $
VUL insuranceVUL insurance7,041  7,429  VUL insurance7,400 7,429 
Other insuranceOther insurance28  31  Other insurance29 31 
Threadneedle investment liabilitiesThreadneedle investment liabilities4,639  5,063  Threadneedle investment liabilities4,780 5,063 
TotalTotal$83,698  $87,488  Total$86,128 $87,488 
3334
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
10.  Variable Annuity and Insurance Guarantees
The majority of the variable annuity contracts offered by the Company contain guaranteed minimum death benefit (“GMDB”) provisions. The Company also offers variable annuities with death benefit provisions that gross up the amount payable by a certain percentage of contract earnings, which are referred to as gain gross-up (“GGU”) benefits. In addition, the Company offers contracts with GMWB and GMAB provisions. The Company previously offered contracts containing guaranteed minimum income benefit (“GMIB”) provisions.
Certain UL policies offered by the Company provide secondary guarantee benefits. The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges.
The following table provides information related to variable annuity guarantees for which the Company has established additional liabilities:
Variable Annuity
Guarantees
by Benefit Type (1)
Variable Annuity
Guarantees
by Benefit Type (1)
June 30, 2020December 31, 2019
Variable Annuity
Guarantees
by Benefit Type (1)
September 30, 2020December 31, 2019
Total Contract ValueContract Value in Separate AccountsNet Amount
at Risk		Weighted Average
Attained Age		Total Contract ValueContract Value in Separate AccountsNet Amount
at Risk		Weighted Average
Attained Age
Variable Annuity
Guarantees
by Benefit Type (1)
Total Contract ValueContract Value in Separate AccountsNet Amount
at Risk		Weighted Average
Attained Age		Total Contract ValueContract Value in Separate AccountsNet Amount
at Risk		Weighted Average
Attained Age
(in millions, except age)(in millions, except age)
GMDB:GMDB:GMDB:
Return of premiumReturn of premium$60,861  $58,931  $32  68$62,909  $60,967  $5  67Return of premium$62,475 $60,537 $16 68$62,909 $60,967 $5 67
Five/six-year resetFive/six-year reset7,545  4,812  25  687,983  5,263  7  67Five/six-year reset7,700 4,966 13 687,983 5,263 7 67
One-year ratchetOne-year ratchet5,613  5,278  56  715,935  5,600  7  70One-year ratchet5,722 5,389 27 715,935 5,600 7 70
Five-year ratchetFive-year ratchet1,325  1,269  4  671,396  1,340  —  66Five-year ratchet1,350 1,295 2 671,396 1,340 0 66
OtherOther1,150  1,132  92  731,192  1,174  65  73Other1,183 1,164 76 731,192 1,174 65 73
Total — GMDBTotal — GMDB$76,494  $71,422  $209  68$79,415  $74,344  $84  67Total — GMDB$78,430 $73,351 $134 68$79,415 $74,344 $84 67
GGU death benefitGGU death benefit$1,072  $1,016  $122  71$1,115  $1,063  $133  71GGU death benefit$1,100 $1,044 $132 71$1,115 $1,063 $133 71
GMIBGMIB$168  $154  $10  70$186  $172  $6  70GMIB$172 $158 $10 71$186 $172 $6 70
GMWB:GMWB:GMWB:
GMWBGMWB$1,855  $1,850  $1  74$1,999  $1,993  $1  73GMWB$1,871 $1,866 $1 74$1,999 $1,993 $1 73
GMWB for lifeGMWB for life45,646  45,568  478  6846,799  46,691  272  68GMWB for life46,837 46,762 391 6846,799 46,691 272 68
Total — GMWBTotal — GMWB$47,501  $47,418  $479  68$48,798  $48,684  $273  68Total — GMWB$48,708 $48,628 $392 68$48,798 $48,684 $273 68
GMABGMAB$2,318  $2,317  $2  60$2,528  $2,524  $—  60GMAB$2,274 $2,273 $1 61$2,528 $2,524 $0 60
(1) Individual variable annuity contracts may have more than one guarantee and therefore may be included in more than one benefit type. Variable annuity contracts for which the death benefit equals the account value are not shown in this table.
The net amount at risk for GMDB, GGU and GMAB is defined as the current guaranteed benefit amount in excess of the current contract value. The net amount at risk for GMIB is defined as the greater of the present value of the minimum guaranteed annuity payments less the current contract value or zero. The net amount at risk for GMWB is defined as the greater of the present value of the minimum guaranteed withdrawal payments less the current contract value or zero.
The following table provides information related to insurance guarantees for which the Company has established additional liabilities:
 June 30, 2020 December 31, 2019
Net Amount
at Risk		Weighted Average Attained AgeNet Amount
at Risk		Weighted Average Attained Age
(in millions, except age)
UL secondary guarantees$6,580  67$6,550  67
 September 30, 2020 December 31, 2019
Net Amount
at Risk		Weighted Average Attained AgeNet Amount
at Risk		Weighted Average Attained Age
(in millions, except age)
UL secondary guarantees$6,600 67$6,550 67
The net amount at risk for UL secondary guarantees is defined as the current guaranteed death benefit amount in excess of the current policyholder account balance.
3435
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Changes in additional liabilities (contra liabilities) for variable annuity and insurance guarantees were as follows:
GMDB & GGUGMIB
GMWB (1)
GMAB (1)
UL GMDB & GGUGMIB
GMWB (1)
GMAB (1)
UL
(in millions) (in millions)
Balance at January 1, 2019Balance at January 1, 2019$19  $8  $875  $(19) $659  Balance at January 1, 2019$19 $8 $875 $(19)$
Incurred claimsIncurred claims1  (1) 422  (16) 64  Incurred claims— (1)1,245 — 110 
Paid claimsPaid claims(3) —  —  —  (25) Paid claims(4)— — — (34)
Balance at June 30, 2019$17  $7  $1,297  $(35) $698  
Balance at September 30, 2019Balance at September 30, 2019$15 $7 $2,120 $(19)$735 
Balance at January 1, 2020Balance at January 1, 2020$16  $7  $1,462  $(39) $758  Balance at January 1, 2020$16 $7 $1,462 $(39)$758 
Incurred claimsIncurred claims5  1  2,387  69  65  Incurred claims10 1 2,219 63 172 
Paid claimsPaid claims(4) (1) —  —  (24) Paid claims(6)(1)— — (34)
Balance at June 30, 2020$17  $7  $3,849  $30  $799  
Balance at September 30, 2020Balance at September 30, 2020$20 $7 $3,681 $24 $896 
(1) The incurred claims for GMWB and GMAB include the change in the fair value of the liabilities (contra liabilities) less paid claims.
The liabilities for guaranteed benefits are supported by general account assets.
The following table summarizes the distribution of separate account balances by asset type for variable annuity contracts providing guaranteed benefits:
June 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions)(in millions)
Mutual funds:Mutual funds:Mutual funds:
EquityEquity$41,265  $44,739  Equity$42,327 $44,739 
BondBond24,326  23,374  Bond24,723 23,374 
OtherOther6,050  6,471  Other6,521 6,471 
Total mutual fundsTotal mutual funds$71,641  $74,584  Total mutual funds$73,571 $74,584 
11.  Debt
The balances and the stated interest rates of outstanding debt of Ameriprise Financial were as follows: 
Outstanding BalanceStated Interest Rate Outstanding BalanceStated Interest Rate
June 30, 2020December 31, 2019June 30, 2020December 31, 2019 September 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions) (in millions) 
Long-term debt:Long-term debt:Long-term debt:
Senior notes due 2020Senior notes due 2020$—  $750  — %5.3 %Senior notes due 2020$— $750 — %5.3 %
Senior notes due 2022Senior notes due 2022500  500  3.0  3.0  Senior notes due 2022500 500 3.0 3.0 
Senior notes due 2023Senior notes due 2023750  750  4.0  4.0  Senior notes due 2023750 750 4.0 4.0 
Senior notes due 2024Senior notes due 2024550  550  3.7  3.7  Senior notes due 2024550 550 3.7 3.7 
Senior notes due 2025Senior notes due 2025500  —  3.0  —  Senior notes due 2025500 — 3.0 — 
Senior notes due 2026Senior notes due 2026500  500  2.9  2.9  Senior notes due 2026500 500 2.9 2.9 
Finance lease liabilitiesFinance lease liabilities51  57  N/AN/AFinance lease liabilities47 57 N/AN/A
Other (1)
Other (1)
(16) (10) N/AN/A
Other (1)
(14)(10)N/AN/A
Total long-term debtTotal long-term debt2,835  3,097  Total long-term debt2,833 3,097 
Short-term borrowings:Short-term borrowings:Short-term borrowings:
Federal Home Loan Bank (“FHLB”) advancesFederal Home Loan Bank (“FHLB”) advances200  201  0.4  1.8  Federal Home Loan Bank (“FHLB”) advances200 201 0.4 1.8 
TotalTotal$3,035  $3,298    Total$3,033 $3,298   
(1) Amounts include adjustments for fair value hedges on the Company’s long-term debt and unamortized discount and debt issuance costs. See Note 14 for information on the Company’s fair value hedges.
3536
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Long-term Debt
On April 2, 2020, the Company issued $500 million of unsecured 3.0% senior notes due April 2, 2025 and incurred debt issuance costs of $4 million. Interest payments are due semi-annually in arrears on April 2 and October 2, commencing on October 2, 2020.
The Company repaid $750 million principal amount of its 5.3% senior notes at maturity on March 16, 2020.
Short-term Borrowings
The Company’s life insurance and bank subsidiaries are members of the FHLB of Des Moines which provides access to collateralized borrowings. The Company has pledged Available-for-Sale securities consisting of commercial mortgage backed securities and residential mortgage backed securities as collateral to access these borrowings. The fair value of the securities pledged is recorded in investments and was $1.3 billion and $905 million, of commercial mortgage backed securities, and $578$660 million and $184 million, of residential mortgage backed securities, as of JuneSeptember 30, 2020 and December 31, 2019, respectively. The remaining maturity of outstanding FHLB advances was less than one month and less than two months as of Juneboth September 30, 2020 and December 31, 2019, respectively.2019. The stated interest rate of the FHLB advances is a weighted average annualized interest rate on outstanding borrowings as of the balance sheet date.
On October 12, 2017, the Company entered into an amended and restated credit agreement that provides for an unsecured revolving credit facility of up to $750 million that expires in October 2022. Under the terms of the credit agreement for the facility, the Company may increase the amount of this facility up to $1.0 billion upon satisfaction of certain approval requirements. As of both JuneSeptember 30, 2020 and December 31, 2019, the Company had 0 borrowings outstanding and had $1 million of letters of credit issued against the facility. The Company’s credit facility contains various administrative, reporting, legal and financial covenants. The Company was in compliance with all such covenants as of both JuneSeptember 30, 2020 and December 31, 2019.
12.  Fair Values of Assets and Liabilities
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability is not exchanged subject to a forced liquidation or distressed sale.
Valuation Hierarchy
The Company categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Company’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:
Level 1 Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
Level 2 Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
3637
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following tables present the balances of assets and liabilities of Ameriprise Financial measured at fair value on a recurring basis:��
June 30, 2020  September 30, 2020 
Level 1Level 2Level 3Total  Level 1Level 2Level 3Total 
(in millions) (in millions) 
AssetsAssetsAssets
Cash equivalentsCash equivalents$3,838  $3,117  $—  $6,955   Cash equivalents$3,171 $3,115 $— $6,286  
Available-for-Sale securities:Available-for-Sale securities:Available-for-Sale securities:
Corporate debt securitiesCorporate debt securities—  11,953  744  12,697   Corporate debt securities— 12,280 742 13,022  
Residential mortgage backed securitiesResidential mortgage backed securities—  9,751  205  9,956   Residential mortgage backed securities— 10,208 50 10,258  
Commercial mortgage backed securitiesCommercial mortgage backed securities—  5,880  —  5,880   Commercial mortgage backed securities— 6,212 — 6,212  
Asset backed securitiesAsset backed securities—  2,798  15  2,813   Asset backed securities— 3,058 30 3,088  
State and municipal obligationsState and municipal obligations—  1,365  —  1,365   State and municipal obligations— 1,380 — 1,380  
U.S. government and agency obligationsU.S. government and agency obligations1,465  —  —  1,465   U.S. government and agency obligations1,680 — — 1,680  
Foreign government bonds and obligationsForeign government bonds and obligations—  266  —  266   Foreign government bonds and obligations— 267 — 267  
Other securitiesOther securities— 52 — 52 
Total Available-for-Sale securitiesTotal Available-for-Sale securities1,465  32,013  964  34,442   Total Available-for-Sale securities1,680 33,457 822 35,959  
Investments at net asset value (“NAV”)Investments at net asset value (“NAV”)7  (1)Investments at net asset value (“NAV”)7 (1)
Trading and other securitiesTrading and other securities13  27  —  40  Trading and other securities10 25 — 35 
Separate account assets at NAVSeparate account assets at NAV83,698  (1)Separate account assets at NAV86,128 (1)
Other assets:Other assets:Other assets:
Interest rate derivative contractsInterest rate derivative contracts—  3,096  —  3,096   Interest rate derivative contracts— 2,015 — 2,015  
Equity derivative contractsEquity derivative contracts388  2,254  —  2,642   Equity derivative contracts442 2,990 — 3,432  
Credit derivative contractsCredit derivative contracts—  3  —  3  Credit derivative contracts— 5 — 5 
Foreign exchange derivative contractsForeign exchange derivative contracts1  35  —  36   Foreign exchange derivative contracts— 36 — 36  
Total other assetsTotal other assets389  5,388  —  5,777   Total other assets442 5,046 — 5,488  
Total assets at fair valueTotal assets at fair value$5,705  $40,545  $964  $130,919   Total assets at fair value$5,303 $41,643 $822 $133,903  

LiabilitiesLiabilitiesLiabilities
Policyholder account balances, future policy benefits and claims:Policyholder account balances, future policy benefits and claims:Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivativesFixed deferred indexed annuity embedded derivatives$—  $3  $41  $44   Fixed deferred indexed annuity embedded derivatives$— $3 $44 $47  
IUL embedded derivativesIUL embedded derivatives—  —  882  882   IUL embedded derivatives— — 926 926  
GMWB and GMAB embedded derivativesGMWB and GMAB embedded derivatives—  —  3,129  3,129  (2)GMWB and GMAB embedded derivatives— — 2,943 2,943 (2)
Structured variable annuity embedded derivativesStructured variable annuity embedded derivatives—  —  9  9  Structured variable annuity embedded derivatives— — 9 9 
Total policyholder account balances, future policy benefits and claimsTotal policyholder account balances, future policy benefits and claims—  3  4,061  4,064  (3)Total policyholder account balances, future policy benefits and claims— 3 3,922 3,925 (3)
Customer depositsCustomer deposits—  8  —  8   Customer deposits— 8 — 8  
Other liabilities:Other liabilities:Other liabilities:
Interest rate derivative contractsInterest rate derivative contracts—  1,032  —  1,032   Interest rate derivative contracts— 934 — 934  
Equity derivative contractsEquity derivative contracts182  2,376  —  2,558   Equity derivative contracts168 2,840 — 3,008  
Credit derivative contracts—  10  —  10  
Foreign exchange derivative contractsForeign exchange derivative contracts3  12  —  15  Foreign exchange derivative contracts2 5 — 7 
OtherOther2  10  48  60   Other2 7 40 49  
Total other liabilitiesTotal other liabilities187  3,440  48  3,675   Total other liabilities172 3,786 40 3,998  
Total liabilities at fair valueTotal liabilities at fair value$187  $3,451  $4,109  $7,747   Total liabilities at fair value$172 $3,797 $3,962 $7,931  
3738
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
 December 31, 2019 
Level 1Level 2Level 3Total
(in millions)
Assets
Cash equivalents$267 $2,924 $— $3,191  
Available-for-Sale securities:
Corporate debt securities— 11,437 750 12,187  
Residential mortgage backed securities— 10,012 17 10,029  
Commercial mortgage backed securities— 5,563 — 5,563  
Asset backed securities— 1,987 19 2,006  
State and municipal obligations— 1,367 — 1,367  
U.S. government and agency obligations1,680 — — 1,680  
Foreign government bonds and obligations— 271 — 271  
Other securities— 26 — 26 
Total Available-for-Sale securities1,680 30,663 786 33,129  
Equity securities1 — — 1 
Investments at NAV6 (1)
Trading and other securities12 26 — 38  
Separate account assets at NAV87,488 (1)
Investments and cash equivalents segregated for regulatory purposes14 — — 14 
Other assets:
Interest rate derivative contracts— 1,455 — 1,455  
Equity derivative contracts162 2,722 — 2,884  
Credit derivative contracts— 4 — 4 
Foreign exchange derivative contracts1 17 — 18  
Total other assets163 4,198 — 4,361  
Total assets at fair value$2,137 $37,811 $786 $128,228  

Liabilities
Policyholder account balances, future policy benefits and claims:
Fixed deferred indexed annuity embedded derivatives$— $3 $43 $46  
IUL embedded derivatives— — 881 881  
GMWB and GMAB embedded derivatives— — 763 763 (4)
Total policyholder account balances, future policy benefits and claims— 3 1,687 1,690 (5)
Customer deposits— 14 — 14  
Other liabilities:
Interest rate derivative contracts— 418 — 418  
Equity derivative contracts36 3,062 — 3,098  
Foreign exchange derivative contracts1 8 — 9 
Other6 4 44 54  
Total other liabilities43 3,492 44 3,579  
Total liabilities at fair value$43 $3,509 $1,731 $5,283  
(1) Amounts are comprised of certain financial instruments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy.
(2) The fair value of the GMWB and GMAB embedded derivatives included $3.2$3.0 billion of individual contracts in a liability position and $25$36 million of individual contracts in an asset position as of JuneSeptember 30, 2020.
(3) The Company’s adjustment for nonperformance risk resulted in a $(1.2)$(1.0) billion cumulative increase (decrease) to the embedded derivatives as of JuneSeptember 30, 2020.
(4) The fair value of the GMWB and GMAB embedded derivatives included $981 million of individual contracts in a liability position and $218 million of individual contracts in an asset position as of December 31, 2019.
(5) The Company’s adjustment for nonperformance risk resulted in a $(502) million cumulative increase (decrease) to the embedded derivatives as of December 31, 2019.
3839
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following tables provide a summary of changes in Level 3 assets and liabilities of Ameriprise Financial measured at fair value on a recurring basis:
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, April 1, 2020$734  $17  $17  $768  
Total gains (losses) included in:
Net income(1) —  —  (1) (1)
Other comprehensive income (loss)14  1  (1) 14  
Purchases—  187  —  187  
Settlements(3) —  (1) (4) 
Balance, June 30, 2020$744  $205  $15  $964  
Changes in unrealized gains (losses) in net income relating to assets held at June 30, 2020$(1) $—  $—  $(1) (1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at June 30, 2020$14  $1  $(1) $14  
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, July 1, 2020$744 $205 $15 $964 
Total gains (losses) included in:
Other comprehensive income (loss)5 — 1 6 
Purchases7 33 — 40 
Settlements(14)— 1 (13)
Transfers into Level 3— — 13 13 
Transfers out of Level 3— (188)— (188)
Balance, September 30, 2020$742 $50 $30 $822 
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020$— $— $— $— 
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020$5 $— $1 $6 
Policyholder Account Balances, Future Policy Benefits and ClaimsOther LiabilitiesPolicyholder Account Balances, Future Policy Benefits and ClaimsOther Liabilities
Fixed Deferred Indexed Annuity Embedded DerivativesIUL Embedded DerivativesGMWB and GMAB Embedded DerivativesStructured Variable Annuity Embedded DerivativesTotalOther LiabilitiesFixed Deferred Indexed Annuity Embedded DerivativesGMWB and GMAB Embedded DerivativesStructured Variable Annuity Embedded DerivativesTotalOther Liabilities
(in millions)(in millions)
Balance, April 1, 2020$33  $725  $3,276  $(9) $4,025  $42  
Balance, July 1, 2020Balance, July 1, 2020$41 $882 $3,129 $9 $4,061 $
Total (gains) losses included in:Total (gains) losses included in:Total (gains) losses included in:
Net incomeNet income7  (2)148  (2)(224) (3)16  (3)(53) 1  (4)Net income3 (1)50 (1)(296)(2)3 (2)(240)(11)(3)
IssuesIssues1  30  86  2  119  8  Issues— 15 93 (3)105 5 
SettlementsSettlements—  (21) (9) —  (30) (3) Settlements— (21)17 — (4)(2)
Balance, June 30, 2020$41  $882  $3,129  $9  $4,061  $48  
Balance, September 30, 2020Balance, September 30, 2020$44 $926 $2,943 $9 $3,922 $40 
Changes in unrealized (gains) losses in net income relating to liabilities held at June 30, 2020$—  $148  (2)$(204) (3)$—  $(56) $—  
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2020Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2020$— $50 (1)$(283)(2)$— $(233)$— 
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, April 1, 2019$847  $37  $6  $890  
Total gains (losses) included in:
Other comprehensive income (loss)13  —  —  13  
Purchases14  417  18  449  
Settlements(65) (2) —  (67) 
Transfers out of Level 3—  (4) —  (4) 
Balance, June 30, 2019$809  $448  $24  $1,281  
Changes in unrealized gains (losses) in net income relating to assets held at June 30, 2019$—  $—  $—  $—  
39
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Policyholder Account Balances, Future Policy Benefits and ClaimsOther Liabilities
Fixed Deferred Indexed Annuity Embedded DerivativesIUL Embedded DerivativesGMWB and GMAB Embedded DerivativesTotal
(in millions)
Balance, April 1, 2019$23  $745  $180  $948  $31  
Total (gains) losses included in:
Net income1  (2)60  (2)433  (3)494  —  
Issues7  31  86  124  —  
Settlements—  (17) (3) (20) —  
Balance, June 30, 2019$31  $819  $696  $1,546  $31  
Changes in unrealized (gains) losses in net income relating to liabilities held at June 30, 2019$—  $60  (2)$430  (3)$490  $—  
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, January 1, 2020$750  $17  $19  $786  
Total gains (losses) included in:
Net income(1) —  (1) (2) (1)
Other comprehensive income (loss)8  1  (2) 7  
Purchases5  187  —  192  
Settlements(18) —  (1) (19) 
Balance, June 30, 2020$744  $205  $15  $964  
Changes in unrealized gains (losses) in net income relating to assets held at June 30, 2020$(1) $—  $(1) $(2) (1)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at June 30, 2020$8  $1  $(2) $7  
Policyholder Account Balances, Future Policy Benefits and ClaimsOther Liabilities
Fixed Deferred Indexed Annuity Embedded DerivativesIUL Embedded DerivativesGMWB and GMAB Embedded DerivativesStructured Variable Annuity Embedded DerivativesTotal
(in millions)
Balance, January 1, 2020$43  $881  $763  $—  $1,687  $44  
Total gains (losses) included in:
Net income(5) (2)3  (2)2,196  (3)13  (3)2,207  (1) (4)
Issues3  38  174  (4) 211  10  
Settlements—  (40) (4) —  (44) (5) 
Balance, June 30, 2020$41  $882  $3,129  $9  $4,061  $48  
Changes in unrealized gains (losses) in net income relating to liabilities held at June 30, 2020$—  $3  (2)$2,219  (3)$—  $2,222  $—  
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, July 1, 2019$809 $448 $24 $1,281 
Total gains (losses) included in:
Net income(1)— — (1)(4)
Other comprehensive income (loss)4 — — 4 
Purchases21 60 — 81 
Settlements(39)(6)— (45)
Transfers into Level 3— — 14 14 
Transfers out of Level 3— (348)(18)(366)
Balance, September 30, 2019$794 $154 $20 $968 
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2019$— $— $— $— 
40
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesCommercial Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, January 1, 2019$913  $136  $20  $6  $1,075  
Total gains (losses) included in:
Other comprehensive income (loss)28  —  —  —  28  
Purchases14  417  —  18  449  
Settlements(146) (6) —  —  (152) 
Transfers out of Level 3—  (99) (20) —  (119) 
Balance, June 30, 2019$809  $448  $—  $24  $1,281  
Changes in unrealized gains (losses) in net income relating to assets held at June 30, 2019$—  $—  $—  $—  $—  
Policyholder Account Balances, Future Policy Benefits and ClaimsOther Liabilities
Fixed Deferred Indexed Annuity Embedded DerivativesIUL Embedded DerivativesGMWB and GMAB Embedded DerivativesTotal
(in millions)
Balance, July 1, 2019$31 $819 $696 $1,546 $31 
Total (gains) losses included in:
Net income— (5)(1)663 (2)658 (5)(3)
Issues6 25 96 127 — 
Settlements— (17)(3)(20)— 
Balance, September 30, 2019$37 $822 $1,452 $2,311 $26 
Changes in unrealized (gains) losses in net income relating to liabilities held at September 30, 2019$— $(5)(1)$660 (2)$655 $— 
Policyholder Account Balances, Future Policy Benefits and ClaimsOther Liabilities
Fixed Deferred Indexed Annuity Embedded DerivativesIUL Embedded DerivativesGMWB and GMAB Embedded DerivativesTotal
(in millions)
Balance, January 1, 2019$14  $628  $328  $970  $30  
Total gains (losses) included in:
Net income3  (2)158  (2)203  (3)364  1  (4)
Issues14  67  170  251  —  
Settlements—  (34) (5) (39) —  
Balance, June 30, 2019$31  $819  $696  $1,546  $31  
Changes in unrealized gains (losses) in net income relating to liabilities held at June 30, 2019$—  $158  (2)$200  (3)$358  $—  
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, January 1, 2020$750 $17 $19 $786 
Total gains (losses) included in:
Net income(1)— (1)(2)(4)
Other comprehensive income (loss)13 1 (1)13 
Purchases12 220 — 232 
Settlements(32)— — (32)
Transfers into Level 3— — 13 13 
Transfers out of Level 3— (188)— (188)
Balance, September 30, 2020$742 $50 $30 $822 
Changes in unrealized gains (losses) in net income relating to assets held at September 30, 2020$(1)$— $(1)$(2)(4)
Changes in unrealized gains (losses) in other comprehensive income (loss) relating to assets held at September 30, 2020$13 $1 $(1)$13 
(1) Included in net investment income in the Consolidated Statements of Operations.
Policyholder Account Balances, Future Policy Benefits and ClaimsOther Liabilities
Fixed Deferred Indexed Annuity Embedded DerivativesIUL Embedded DerivativesGMWB and GMAB Embedded DerivativesStructured Annuity Embedded DerivativesTotal
(in millions)
Balance, January 1, 2020$43 $881 $763 $0 $1,687 $44 
Total gains (losses) included in:
Net income(2)(1)53 (1)1,900 (2)16 (2)1,967 (12)(3)
Issues3 53 267 (7)316 15 
Settlements— (61)13 — (48)(7)
Balance, September 30, 2020$44 $926 $2,943 $9 $3,922 $40 
Changes in unrealized gains (losses) in net income relating to liabilities held at September 30, 2020$— $53 (1)$1,936 (2)$— $1,989 $— 
(2)
41
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Available-for-Sale Securities
Corporate Debt SecuritiesResidential Mortgage Backed SecuritiesCommercial Mortgage Backed SecuritiesAsset Backed SecuritiesTotal
(in millions)
Balance, January 1, 2019$913 $136 $20 $6 $1,075 
Total gains (losses) included in:
Net income(1)— — — (1)(4)
Other comprehensive income (loss)32 — — — 32 
Purchases35 477 — 18 530 
Settlements(185)(12)— — (197)
Transfers into Level 3— — — 14 14 
Transfers out of Level 3— (447)(20)(18)(485)
Balance, September 30, 2019$794 $154 $0 $20 $968 
Changes in unrealized gains (losses)
in net income relating to assets held at September 30, 2019
$(1)$— $— $— $(1)(4)
Policyholder Account Balances, Future Policy Benefits and ClaimsOther Liabilities
Fixed Deferred Indexed Annuity Embedded DerivativesIUL Embedded DerivativesGMWB and GMAB Embedded DerivativesTotal
(in millions)
Balance, January 1, 2019$14 $628 $328 $970 $30 
Total gains (losses) included in:
Net income3 (1)153 (1)866 (2)1,022 (4)(3)
Issues20 92 266 378 — 
Settlements— (51)(8)(59)— 
Balance, September 30, 2019$37 $822 $1,452 $2,311 $26 
Changes in unrealized gains (losses) in net income relating to liabilities held at September 30, 2019$— $153 (1)$859 (2)$1,012 $— 
(1) Included in interest credited to fixed accounts in the Consolidated Statements of Operations.
(3)(2) Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.
(4) (3)Included in general and administrative expense in the Consolidated Statements of Operations.
(4) Included in net investment income in the Consolidated Statements of Operations.
The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $(1.2) billion$(123) million and $43$85 million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual, for the three months ended JuneSeptember 30, 2020 and 2019, respectively.
The increase (decrease) to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $569$446 million and $(115)$(29) million, net of DAC, DSIC, unearned revenue amortization and the reinsurance accrual, for the sixnine months ended JuneSeptember 30, 2020 and 2019, respectively.
Securities transferred from Level 3 primarily represent securities with fair values that are now obtained from a third-party pricing service with observable inputs.
4142
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following tables provide a summary of the significant unobservable inputs used in the fair value measurements developed by the Company or reasonably available to the Company of Level 3 assets and liabilities:
June 30, 2020 September 30, 2020
Fair
Value		Valuation TechniqueUnobservable InputRange Weighted AverageFair ValueValuation TechniqueUnobservable InputRange Weighted Average
(in millions)(in millions)
Corporate debt securities (private placements)Corporate debt securities (private placements)$743  Discounted cash flow
Yield/spread to U.S. Treasuries (1)
1.4 %–5.3%2.2%Corporate debt securities (private placements)$734 Discounted cash flow
Yield/spread to U.S. Treasuries (1)
1.2 %–4.5%1.9%
Asset backed securitiesAsset backed securities$2  Discounted cash flowAnnual short-term default rate8.5%8.5%Asset backed securities$2 Discounted cash flowAnnual short-term default rate8.5%8.5%
Annual long-term default rate (2)
3.5 %–4.0%3.6%
Annual long-term default rate (2)
3.5 %–4.0%3.6%
Discount rate20.0%20.0%Discount rate15.0%15.0%
Constant prepayment rate10.0%10.0%Constant prepayment rate10.0%10.0%
Loss recovery63.6%63.6%Loss recovery63.6%63.6%
IUL embedded derivativesIUL embedded derivatives$882  Discounted cash flow
Nonperformance risk (3)
95 bps95 bpsIUL embedded derivatives$926 Discounted cash flow
Nonperformance risk (3)
85 bps85 bps
Fixed deferred indexed annuity embedded derivativesFixed deferred indexed annuity embedded derivatives$41  Discounted cash flow
Surrender rate (4)
0.0 %–50.0%1.4%Fixed deferred indexed annuity embedded derivatives$44 Discounted cash flow
Surrender rate (4)
0.0 %–50.0%1.2%
  
Nonperformance risk (3)
95 bps95 bps   
Nonperformance risk (3)
85 bps85 bps
GMWB and GMAB embedded derivativesGMWB and GMAB embedded derivatives$3,129  Discounted cash flow
Utilization of guaranteed withdrawals (5) (6)
0.0 %–36.0%11.0%GMWB and GMAB embedded derivatives$2,943 Discounted cash flow
Utilization of guaranteed withdrawals (5) (6)
0.0 %–48.0%10.5%
  
Surrender rate (4)
0.1 %–73.5%3.6%   
Surrender rate (4)
0.1 %–73.5%3.6%
  
Market volatility (7) (8)
4.6 %–18.0%11.9%   
Market volatility (7) (8)
4.6 %–17.9%11.8%
  
Nonperformance risk (3)
95 bps95 bps   
Nonperformance risk (3)
85 bps85 bps
Structured variable annuity embedded derivativesStructured variable annuity embedded derivatives$9  Discounted cash flow
Surrender rate (4)
0.8 %–40.0%0.9%Structured variable annuity embedded derivatives$9 Discounted cash flow
Surrender rate (4)
0.8 %–40.0%0.9%
Nonperformance risk (3)
95 bps95 bps
Nonperformance risk (3)
85 bps85 bps
Contingent consideration liabilitiesContingent consideration liabilities$48  Discounted cash flowDiscount rate9.0%9.0%Contingent consideration liabilities$40 Discounted cash flow
Discount rate (9)
0.0 %–9.0 %3.3%

December 31, 2019 December 31, 2019
Fair
Value		Valuation TechniqueUnobservable InputRangeWeighted AverageFair ValueValuation TechniqueUnobservable InputRangeWeighted Average
(in millions)(in millions)
Corporate debt securities (private placements)Corporate debt securities (private placements)$749  Discounted cash flowYield/spread to U.S. Treasuries0.8 %–2.8%1.2%Corporate debt securities (private placements)$749 Discounted cash flowYield/spread to U.S. Treasuries0.8 %–2.8%1.2%
Asset backed securitiesAsset backed securities$5  Discounted cash flowAnnual short-term default rate3.3%Asset backed securities$5 Discounted cash flowAnnual short-term default rate3.3%
Annual long-term default rate3.0%Annual long-term default rate3.0%
Discount rate12.0%Discount rate12.0%
Constant prepayment rate5.0 %–10.0%10.0%Constant prepayment rate5.0 %–10.0%10.0%
Loss recovery36.4%–63.6%63.6%Loss recovery36.4 %–63.6%63.6%
IUL embedded derivativesIUL embedded derivatives$881  Discounted cash flow
Nonperformance risk (3)
65 bpsIUL embedded derivatives$881 Discounted cash flow
Nonperformance risk (3)
65 bps
Fixed deferred indexed annuity embedded derivativesFixed deferred indexed annuity embedded derivatives$43  Discounted cash flowSurrender rate0.0 %–50.0%Fixed deferred indexed annuity embedded derivatives$43 Discounted cash flowSurrender rate0.0 %–50.0%
 
Nonperformance risk (3)
65 bps 
Nonperformance risk (3)
65 bps
GMWB and GMAB embedded derivativesGMWB and GMAB embedded derivatives$763  Discounted cash flow
Utilization of guaranteed withdrawals (5)
0.0 %–36.0%GMWB and GMAB embedded derivatives$763 Discounted cash flow
Utilization of guaranteed withdrawals (5)
0.0 %–36.0%
Surrender rate0.1 %–73.5%Surrender rate0.1 %–73.5%
  
Market volatility (7)
3.7 %–15.9%   
Market volatility (7)
3.7 %–15.9%
  
Nonperformance risk (3)
65 bps   
Nonperformance risk (3)
65 bps
Contingent consideration liabilitiesContingent consideration liabilities$44  Discounted cash flowDiscount rate9.0%Contingent consideration liabilities$44 Discounted cash flowDiscount rate9.0%
(1) The weighted average for the spread to U.S. Treasuries for corporate debt securities (private placements) is weighted based on the security’s market value as a percentage of the aggregate market value of the securities.
(2) The weighted average annual long-term default rate of asset backed securities is weighted based on the security’s market value as a percentage of the aggregate market value of the securities.
43
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
(3) The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives.
42
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
(4) The weighted average surrender rate is weighted based on the benefit base of each contract and represents the average assumption in the current year including the effect of a dynamic surrender formula.
(5) The utilization of guaranteed withdrawals represents the percentage of contractholders that will begin withdrawing in any given year.
(6) The weighted average utilization rate represents the average assumption for the current year, weighting each policy evenly. The calculation excludes policies that have already started taking withdrawals.
(7) Market volatility is implied volatility of fund of funds and managed volatility funds.
(8) The weighted average market volatility represents the average volatility across all contracts, weighted by the size of the guaranteed benefit.
(9) The weighted average discount rate represents the average discount rate across all contingent consideration liabilities, weighted based on the size of the contingent consideration liability.
Level 3 measurements not included in the table above are obtained from non-binding broker quotes where unobservable inputs utilized in the fair value calculation are not reasonably available to the Company.
Uncertainty of Fair Value Measurements
Significant increases (decreases) in the yield/spread to U.S. Treasuries used in the fair value measurement of Level 3 corporate debt securities in isolation would have resulted in a significantly lower (higher) fair value measurement.
Significant increases (decreases) in the annual default rate and discount rate used in the fair value measurement of Level 3 asset backed securities in isolation, generally, would have resulted in a significantly lower (higher) fair value measurement and significant increases (decreases) in loss recovery in isolation would have resulted in a significantly higher (lower) fair value measurement.
Significant increases (decreases) in the constant prepayment rate in isolation would have resulted in a significantly lower (higher) fair value measurement.
Significant increases (decreases) in nonperformance risk used in the fair value measurement of the IUL embedded derivatives in isolation would have resulted in a significantly lower (higher) fair value measurement.
Significant increases (decreases) in nonperformance risk and surrender rate used in the fair value measurements of the fixed deferred indexed annuity embedded derivatives and structured variable annuity embedded derivatives in isolation would have resulted in a significantly lower (higher) liability value.
Significant increases (decreases) in utilization and volatility used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would have resulted in a significantly higher (lower) liability value.
Significant increases (decreases) in nonperformance risk and surrender rate used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would have resulted in a significantly lower (higher) liability value. Utilization of guaranteed withdrawals and surrender rates vary with the type of rider, the duration of the policy, the age of the contractholder, the distribution channel and whether the value of the guaranteed benefit exceeds the contract accumulation value.
Significant increases (decreases) in the discount rate used in the fair value measurement of the contingent consideration liability in isolation would have resulted in a significantly lower (higher) fair value measurement.
Determination of Fair Value
The Company uses valuation techniques consistent with the market and income approaches to measure the fair value of its assets and liabilities. The Company’s market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company’s income approach uses valuation techniques to convert future projected cash flows to a single discounted present value amount. When applying either approach, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs.
The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.
Assets
Cash Equivalents
Cash equivalents include time deposits and other highly liquid investments with original or remaining maturities at the time of purchase of 90 days or less. Actively traded money market funds are measured at their NAV and classified as Level 1. U.S. Treasuries are also classified as Level 1. The Company’s remaining cash equivalents are classified as Level 2 and measured at amortized cost, which is a reasonable estimate of fair value because of the short time between the purchase of the instrument and its expected realization.
Investments (Available-for-Sale Securities, Equity Securities and Trading Securities)
When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from third-party pricing services, non-binding broker quotes, or other model-based valuation techniques.
Level 1 securities primarily include U.S. Treasuries.
4344
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Level 1 securities primarily include U.S. Treasuries.
Level 2 securities primarily include corporate bonds, residential mortgage backed securities, commercial mortgage backed securities, asset backed securities, state and municipal obligations and foreign government securities. The fair value of these Level 2 securities is based on a market approach with prices obtained from third-party pricing services. Observable inputs used to value these securities can include, but are not limited to, reported trades, benchmark yields, issuer spreads and non-binding broker quotes.
Level 3 securities primarily include certain corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and asset backed securities. The fair value of corporate bonds, non-agency residential mortgage backed securities, commercial mortgage backed securities and certain asset backed securities classified as Level 3 is typically based on a single non-binding broker quote. The underlying inputs used for some of the non-binding broker quotes are not readily available to the Company. The Company’s privately placed corporate bonds are typically based on a single non-binding broker quote. The fair value of certain asset backed securities is determined using a discounted cash flow model. Inputs used to determine the expected cash flows include assumptions about discount rates and default, prepayment and recovery rates of the underlying assets. Given the significance of the unobservable inputs to this fair value measurement, the fair value of the investment in certain asset backed securities is classified as Level 3.
In consideration of the above, management is responsible for the fair values recorded on the financial statements. Prices received from third-party pricing services are subjected to exception reporting that identifies investments with significant daily price movements as well as no movements. The Company reviews the exception reporting and resolves the exceptions through reaffirmation of the price or recording an appropriate fair value estimate. The Company also performs subsequent transaction testing. The Company performs annual due diligence of third-party pricing services. The Company’s due diligence procedures include assessing the vendor’s valuation qualifications, control environment, analysis of asset-class specific valuation methodologies, and understanding of sources of market observable assumptions and unobservable assumptions, if any, employed in the valuation methodology. The Company also considers the results of its exception reporting controls and any resulting price challenges that arise.
Separate Account Assets
The fair value of assets held by separate accounts is determined by the NAV of the funds in which those separate accounts are invested. The NAV is used as a practical expedient for fair value and represents the exit price for the separate account. Separate account assets are excluded from classification in the fair value hierarchy.
Investments and Cash Equivalents Segregated for Regulatory Purposes
Investments and cash equivalents segregated for regulatory purposes includes U.S. Treasuries that are classified as Level 1.
Other Assets
Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active over-the-counter (“OTC”) markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps, foreign currency forwards and the majority of options. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial as of both JuneSeptember 30, 2020 and December 31, 2019. See Note 13 and Note 14 for further information on the credit risk of derivative instruments and related collateral.
Liabilities
Policyholder Account Balances, Future Policy Benefits and Claims
There is no active market for the transfer of the Company’s embedded derivatives attributable to the provisions of certain variable annuity riders, fixed deferred indexed annuity, structured variable annuity and IUL products.
The Company values the embedded derivatives attributable to the provisions of certain variable annuity riders using internal valuation models. These models calculate fair value as the present value of future expected benefit payments less the present value of future expected rider fees attributable to the embedded derivative feature. The projected cash flows used by these models include observable capital market assumptions and incorporate significant unobservable inputs related to implied volatility as well as contractholder behavior assumptions that include margins for risk, all of which the Company believes a market participant would incorporate into an exit price. The fair value also reflects a current estimate of the Company’s nonperformance risk specific to these embedded derivatives. Given the significant unobservable inputs to this valuation, these measurements are classified as Level 3. The embedded derivatives attributable to these provisions are recorded in policyholder account balances, future policy benefits and claims.
The Company uses a discounted cash flow model to determine the fair value of the embedded derivatives associated with the provisions of its equity index annuity product. The projected cash flows generated by this model are based on significant observable inputs related to interest rates, volatilities and equity index levels and, therefore, are classified as Level 2.
45
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The Company uses discounted cash flow models including Black-Scholes calculations to determine the fair value of the embedded derivatives associated with the provisions of its fixed deferred indexed annuity, structured variable annuity and IUL products. The structured variable annuity product is a limited flexible purchase payment annuity that offers 45 different indexed account options
44
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
providing equity market exposure and a fixed account. Each indexed account includes a protection option (a buffer or a floor). If the index has a negative return, contractholder losses will be reduced by buffer or limited to a floor. The portion allocated to an indexed account is accounted for as an embedded derivative. The fair value of fixed deferred indexed annuity, structured variable annuity and IUL embedded derivatives includes significant observable interest rates, volatilities and equity index levels and the significant unobservable estimate of the Company’s nonperformance risk. Given the significance of the nonperformance risk assumption to the fair value, the fixed deferred indexed annuity, structured variable annuity and IUL embedded derivatives are classified as Level 3.
The embedded derivatives attributable to these provisions are recorded in policyholder account balances, future policy benefits and claims.
Customer Deposits
The Company uses various Black-Scholes calculations to determine the fair value of the embedded derivative liability associated with the provisions of its stock market certificates (“SMC”). The inputs to these calculations are primarily market observable and include interest rates, volatilities and equity index levels. As a result, these measurements are classified as Level 2.
Other Liabilities
Derivatives that are measured using quoted prices in active markets, such as derivatives that are exchange-traded are classified as Level 1 measurements. The variation margin on futures contracts is also classified as Level 1. The fair value of derivatives that are traded in less active OTC markets is generally measured using pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps, foreign currency forwards and the majority of options. The Company’s nonperformance risk associated with uncollateralized derivative liabilities was immaterial as of both JuneSeptember 30, 2020 and December 31, 2019. See Note 13 and Note 14 for further information on the credit risk of derivative instruments and related collateral.
Securities sold but not yet purchased represent obligations of the Company to deliver specified securities that it does not yet own, creating a liability to purchase the security in the market at prevailing prices. When available, the fair value of securities is based on quoted prices in active markets. If quoted prices are not available, fair values are obtained from nationally-recognized pricing services, or other model-based valuation techniques such as the present value of cash flows. Level 1 securities sold but not yet purchased primarily include U.S Treasuries traded in active markets. Level 2 securities sold but not yet purchased primarily include corporate bonds.
Contingent consideration liabilities consist of earn-outs and/or deferred payments related to the Company’s acquisitions. Contingent consideration liabilities are recorded at fair value using a discounted cash flow model under multiple scenarios and an unobservable input (discount rate). Given the use of a significant unobservable input, the fair value of contingent consideration liabilities is classified as Level 3 within the fair value hierarchy.
Fair Value on a Nonrecurring Basis
The Company assesses its investment in affordable housing partnerships for impairment. The investments that are determined to be impaired are written down to their fair value. The Company uses a discounted cash flow model to measure the fair value of these investments. Inputs to the discounted cash flow model are estimates of future net operating losses and tax credits available to the Company and discount rates based on market condition and the financial strength of the syndicator (general partner). The balance of affordable housing partnerships measured at fair value on a nonrecurring basis was $120$99 million and $158 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively, and is classified as Level 3 in the fair value hierarchy.
4546
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Asset and Liabilities Not Reported at Fair Value
The following tables provide the carrying value and the estimated fair value of financial instruments that are not reported at fair value:
June 30, 2020 September 30, 2020
Carrying ValueFair ValueCarrying ValueFair Value
Level 1Level 2Level 3TotalCarrying ValueLevel 1Level 3Total
(in millions)(in millions)
Financial AssetsFinancial AssetsFinancial Assets
Mortgage loans, netMortgage loans, net$2,809  $—  $22  $2,823  $2,845  Mortgage loans, net$2,770 $— $22 $2,875 $2,897 
Policy loansPolicy loans856  —  —  824  824  Policy loans849 — 849 — 849 (1)
ReceivablesReceivables3,224  179  911  2,188  3,278  Receivables3,175 57 972 2,360 3,389 
Restricted and segregated cashRestricted and segregated cash2,416  2,416  —  —  2,416  Restricted and segregated cash2,551 2,551 — — 2,551 
Other investments and assetsOther investments and assets671  —  575  72  647  Other investments and assets750 — 642 96 738 
Financial LiabilitiesFinancial LiabilitiesFinancial Liabilities
Policyholder account balances, future policy benefits and claimsPolicyholder account balances, future policy benefits and claims$9,272  $—  $—  $10,927  $10,927  Policyholder account balances, future policy benefits and claims$9,600 $— $— $11,300 $11,300 
Investment certificate reservesInvestment certificate reserves7,442  —  —  7,444  7,444  Investment certificate reserves7,156 — — 6,350 6,350 
Banking and brokerage depositsBanking and brokerage deposits8,630  8,630  —  —  8,630  Banking and brokerage deposits9,666 9,666 — — 9,666 
Separate account liabilities — investment contractsSeparate account liabilities — investment contracts4,954  —  4,954  —  4,954  Separate account liabilities — investment contracts5,103 — 5,103 — 5,103 
Debt and other liabilitiesDebt and other liabilities3,232  219  3,245  16  3,480  Debt and other liabilities3,115 103 3,257 15 3,375 
December 31, 2019 December 31, 2019
Carrying ValueFair ValueCarrying ValueFair Value
Level 1Level 2Level 3TotalCarrying ValueLevel 1Level 3Total
(in millions)(in millions)
Financial AssetsFinancial AssetsFinancial Assets
Mortgage loans, netMortgage loans, net$2,778  $—  $—  $2,833  $2,833  Mortgage loans, net$2,778 $— $— $2,833 $2,833 
Policy loansPolicy loans868  —  —  810  810  Policy loans868 — 868 — 868 (1)
ReceivablesReceivables3,168  102  934  2,229  3,265  Receivables3,168 102 934 2,229 3,265 
Restricted and segregated cashRestricted and segregated cash2,372  2,372  —  —  2,372  Restricted and segregated cash2,372 2,372 — — 2,372 
Other investments and assetsOther investments and assets671  —  626  46  672  Other investments and assets671 — 626 46 672 
Financial LiabilitiesFinancial LiabilitiesFinancial Liabilities
Policyholder account balances, future policy benefits and claimsPolicyholder account balances, future policy benefits and claims$9,110  $—  $—  $10,061  $10,061  Policyholder account balances, future policy benefits and claims$9,110 $— $— $10,061 $10,061 
Investment certificate reservesInvestment certificate reserves7,508  —  —  7,497  7,497  Investment certificate reserves7,508 — — 7,497 7,497 
Banking and brokerage depositsBanking and brokerage deposits6,929  6,929  —  —  6,929  Banking and brokerage deposits6,929 6,929 — — 6,929 
Separate account liabilities — investment contractsSeparate account liabilities — investment contracts5,403  —  5,403  —  5,403  Separate account liabilities — investment contracts5,403 — 5,403 — 5,403 
Debt and other liabilitiesDebt and other liabilities3,374  104  3,372  21  3,497  Debt and other liabilities3,374 104 3,372 21 3,497 
(1) During the third quarter of 2020, management changed the fair value methodology for policy loans from estimating future expected cash flows and discounting the cash flows at a rate based on the U.S. Treasury curve to using the carrying value as an approximation of fair value as the policy loans are fully collateralized by the cash surrender value of the underlying policies. As a result, policy loans were reclassified from Level 3 to Level 2 in the valuation hierarchy. For comparability and consistency purposes, prior period amounts were revised to reflect the current methodology and classification.
Receivables include the deposit receivable, brokerage margin loans, securities borrowed and loans to financial advisors. Restricted and segregated cash includes cash segregated under federal and other regulations held in special reserve bank accounts for the exclusive benefit of the Company’s brokerage customers. Other investments and assets primarily include syndicated loans, credit card receivables, certificate of deposits with original or remaining maturities at the time of purchase of more than 90 days, the Company’s membership in the FHLB and investments related to the Community Reinvestment Act. See Note 7 for additional information on mortgage loans, policy loans, syndicated loans, credit card receivables and the deposit receivable.
Policyholder account balances, future policy benefits and claims include fixed annuities in deferral status, non-life contingent fixed annuities in payout status, indexed annuity host contracts and the fixed portion of a small number of variable annuity contracts classified as investment contracts. See Note 9 for additional information on these liabilities. Investment certificate reserves represent customer deposits for fixed rate certificates and stock market certificates. Banking and brokerage deposits are amounts payable to
47
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
customers related to free credit balances, funds deposited by customers and funds accruing to customers as a result of trades or contracts. Separate account liabilities are primarily investment contracts in pooled pension funds offered by Threadneedle. Debt and other liabilities include the Company’s long-term debt, short-term borrowings, securities loaned and future funding commitments to affordable housing partnerships and other real estate partnerships. See Note 11 for further information on the Company’s long-term debt and short-term borrowings.
46
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
13.  Offsetting Assets and Liabilities
Certain financial instruments and derivative instruments are eligible for offset in the Consolidated Balance Sheets. The Company’s derivative instruments and securities borrowing and lending agreements are subject to master netting and collateral arrangements and qualify for offset. A master netting arrangement with a counterparty creates a right of offset for amounts due to and from that same counterparty that is enforceable in the event of a default or bankruptcy. Securities borrowed and loaned result from transactions between the Company’s broker dealer subsidiary and other financial institutions and are recorded at the amount of cash collateral advanced or received. Securities borrowed and securities loaned are primarily equity securities. The Company’s securities borrowed and securities loaned transactions generally do not have a fixed maturity date and may be terminated by either party under customary terms.
The Company’s policy is to recognize amounts subject to master netting arrangements on a gross basis in the Consolidated Balance Sheets.
The following tables present the gross and net information about the Company’s assets subject to master netting arrangements:
June 30, 2020
Gross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetsAmounts of Assets Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the 
Consolidated Balance SheetsNet Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$5,480 $— $5,480 $(3,174)$(2,202)$(58)$46 
OTC cleared30 — 30 (30)— — — 
Exchange-traded267 — 267 (102)1 — 166 
Total derivatives5,777 — 5,777 (3,306)(2,201)(58)212 
Securities borrowed179 — 179 (80)— (97)2 
Total$5,956 $— $5,956 $(3,386)$(2,201)$(155)$214 
 September 30, 2020
Gross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetsAmounts of Assets Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the
Consolidated Balance Sheets		Net Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$5,137$—$5,137$(3,502)$(1,602)$(22)$11
OTC cleared44—44(44)——0
Exchange-traded307—307(86)(159)—62
Total derivatives5,488—5,488(3,632)(1,761)(22)73
Securities borrowed57—57(10)—(46)1
Total$5,545$—$5,545$(3,642)$(1,761)$(68)$74
December 31, 2019
Gross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetsAmounts of Assets Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the 
Consolidated Balance SheetsNet Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$4,258 $— $4,258 $(2,933)$(1,244)$(73)$8 
OTC cleared21 — 21 (21)— — — 
Exchange-traded82 — 82 (5)— — 77 
Total derivatives4,361 — 4,361 (2,959)(1,244)(73)85 
Securities borrowed102 — 102 (14)— (85)3 
Total$4,463 $— $4,463 $(2,973)$(1,244)$(158)$88 
 December 31, 2019
Gross Amounts of Recognized AssetsGross Amounts Offset in the Consolidated Balance SheetsAmounts of Assets Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the
Consolidated Balance Sheets		Net Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$4,258$—$4,258$(2,933)$(1,244)$(73)$8
OTC cleared21—21(21)——0
Exchange-traded82—82(5)——77
Total derivatives4,361—4,361(2,959)(1,244)(73)85
Securities borrowed102—102(14)—(85)3
Total$4,463$—$4,463$(2,973)$(1,244)$(158)$88
(1) Represents the amount of assets that could be offset by liabilities with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.
4748
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The following tables present the gross and net information about the Company’s liabilities subject to master netting arrangements:
June 30, 2020
Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the 
Consolidated Balance SheetsAmounts of Liabilities Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the 
Consolidated Balance SheetsNet Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$3,446 $— $3,446 $(3,174)$(2)$(270)$— 
OTC cleared57 — 57 (30)— — 27 
Exchange-traded112 — 112 (102)— — 10 
Total derivatives3,615 — 3,615 (3,306)(2)(270)37 
Securities loaned219 — 219 (80)— (136)3 
Total$3,834 $— $3,834 $(3,386)$(2)$(406)$40 
 September 30, 2020
Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the
Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the
Consolidated Balance Sheets		Net Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$3,759$—$3,759$(3,502)$0$(256)$1
OTC cleared103—103(44)——59
Exchange-traded87—87(86)——1
Total derivatives3,949—3,949(3,632)0(256)61
Securities loaned103—103(10)—(90)3
Total$4,052$—$4,052$(3,642)$0$(346)$64
December 31, 2019
Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the 
Consolidated Balance SheetsAmounts of Liabilities Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the 
Consolidated Balance SheetsNet Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$3,473 $— $3,473 $(2,933)$— $(540)$— 
OTC cleared41 — 41 (21)— — 20 
Exchange-traded11 — 11 (5)— — 6 
Total derivatives3,525 — 3,525 (2,959)— (540)26 
Securities loaned104 — 104 (14)— (87)3 
Total$3,629 $— $3,629 $(2,973)$— $(627)$29 
 December 31, 2019
Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the
Consolidated Balance Sheets		Amounts of Liabilities Presented in the Consolidated Balance SheetsGross Amounts Not Offset in the
Consolidated Balance Sheets		Net Amount
Financial Instruments (1)
Cash CollateralSecurities Collateral
(in millions)
Derivatives:
OTC$3,473$—$3,473$(2,933)$—$(540)$0
OTC cleared41—41(21)——20
Exchange-traded11—11(5)——6
Total derivatives3,525—3,525(2,959)—(540)26
Securities loaned104—104(14)—(87)3
Total$3,629$—$3,629$(2,973)$—$(627)$29
(1) Represents the amount of liabilities that could be offset by assets with the same counterparty under master netting or similar arrangements that management elects not to offset on the Consolidated Balance Sheets.
In the tables above, the amount of assets or liabilities presented are offset first by financial instruments that have the right of offset under master netting or similar arrangements, then any remaining amount is reduced by the amount of cash and securities collateral. The actual collateral may be greater than amounts presented in the tables.
When the fair value of collateral accepted by the Company is less than the amount due to the Company, there is a risk of loss if the counterparty fails to perform or provide additional collateral. To mitigate this risk, the Company monitors collateral values regularly and requires additional collateral when necessary. When the value of collateral pledged by the Company declines, it may be required to post additional collateral.
Freestanding derivative instruments are reflected in other assets and other liabilities. Cash collateral pledged by the Company is reflected in other assets and cash collateral accepted by the Company is reflected in other liabilities. Securities borrowing and lending agreements are reflected in receivables and other liabilities, respectively. See Note 14 for additional disclosures related to the Company’s derivative instruments and Note 5 for information related to derivatives held by consolidated investment entities.
4849
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
14.  Derivatives and Hedging Activities
Derivative instruments enable the Company to manage its exposure to various market risks. The value of such instruments is derived from an underlying variable or multiple variables, including equity, foreign exchange and interest rate indices or prices. The Company primarily enters into derivative agreements for risk management purposes related to the Company’s products and operations.
Certain of the Company’s freestanding derivative instruments are subject to master netting arrangements. The Company’s policy on the recognition of derivatives on the Consolidated Balance Sheets is to not offset fair value amounts recognized for derivatives and collateral arrangements executed with the same counterparty under the same master netting arrangement. See Note 13 for additional information regarding the estimated fair value of the Company’s freestanding derivatives after considering the effect of master netting arrangements and collateral.
The Company uses derivatives as economic hedges and accounting hedges. The following table presents the notional value and gross fair value of derivative instruments, including embedded derivatives:
June 30, 2020December 31, 2019September 30, 2020December 31, 2019
NotionalGross Fair ValueNotionalGross Fair ValueNotionalGross Fair ValueNotionalGross Fair Value
Assets (1)
Liabilities (2)(3)
Assets (1)
Liabilities (2)(3)
Assets (1)
Liabilities (2)(3)
Liabilities (2)(3)
(in millions)(in millions)
Derivatives designated as hedging instrumentsDerivatives designated as hedging instrumentsDerivatives designated as hedging instruments
Interest rate contracts – fair value hedgesInterest rate contracts – fair value hedges$—  $—  $—  $375  $3  $—  Interest rate contracts – fair value hedges$— $— $— $375 $3 $
Foreign exchange contracts – net investment hedgesForeign exchange contracts – net investment hedges65  3  —  93  —  3  Foreign exchange contracts – net investment hedges32 0 — 93 — 3 
Total qualifying hedgesTotal qualifying hedges65  3  —  468  3  3  Total qualifying hedges32 0 — 468 3 3 
Derivatives not designated as hedging instrumentsDerivatives not designated as hedging instrumentsDerivatives not designated as hedging instruments
Interest rate contractsInterest rate contracts70,778  3,096  1,032  57,979  1,452  418  Interest rate contracts70,716 2,015 934 57,979 1,452 418 
Equity contractsEquity contracts59,097  2,642  2,558  61,921  2,884  3,098  Equity contracts63,269 3,432 3,008 61,921 2,884 3,098 
Credit contractsCredit contracts2,581  3  10  1,419  4  —  Credit contracts2,594 5 0 1,419 4 — 
Foreign exchange contractsForeign exchange contracts3,470  33  15  3,412  18  6  Foreign exchange contracts3,977 36 7 3,412 18 6 
Other contractsOther contracts—  —  —  1  —  —  Other contracts1 — — 1 — — 
Total non-designated hedgesTotal non-designated hedges135,926  5,774  3,615  124,732  4,358  3,522  Total non-designated hedges140,557 5,488 3,949 124,732 4,358 3,522 
Embedded derivativesEmbedded derivativesEmbedded derivatives
GMWB and GMAB (4)
GMWB and GMAB (4)
N/A—  3,129  N/A—  763  
GMWB and GMAB (4)
N/A— 2,943 N/A— 763 
IULIULN/A—  882  N/A—  881  IULN/A— 926 N/A— 881 
Fixed deferred indexed annuitiesFixed deferred indexed annuitiesN/A—  44  N/A—  46  Fixed deferred indexed annuitiesN/A— 47 N/A— 46 
Structured variable annuitiesStructured variable annuitiesN/A—  9  N/A—  —  Structured variable annuitiesN/A— 9 N/A— — 
SMCSMCN/A—  8  N/A—  14  SMCN/A— 8 N/A— 14 
Total embedded derivativesTotal embedded derivativesN/A—  4,072  N/A—  1,704  Total embedded derivativesN/A— 3,933 N/A— 1,704 
Total derivativesTotal derivatives$135,991  $5,777  $7,687  $125,200  $4,361  $5,229  Total derivatives$140,589 $5,488 $7,882 $125,200 $4,361 $5,229 
N/A  Not applicable.
(1) The fair value of freestanding derivative assets is included in Other assets on the Consolidated Balance Sheets.
(2) The fair value of freestanding derivative liabilities is included in Other liabilities on the Consolidated Balance Sheets. The fair value of GMWB and GMAB, IUL, fixed deferred indexed annuity and structured variable annuity embedded derivatives is included in Policyholder account balances, future policy benefits and claims on the Consolidated Balance Sheets. The fair value of the SMC embedded derivative liability is included in Customer deposits on the Consolidated Balance Sheets.
(3) The fair value of the Company’s derivative liabilities after considering the effects of master netting arrangements, cash collateral held by the same counterparty and the fair value of net embedded derivatives was $4.4$4.3 billion and $2.3 billion as of JuneSeptember 30, 2020 and December 31, 2019, respectively. See Note 13 for additional information related to master netting arrangements and cash collateral. See Note 5 for information about derivatives held by consolidated VIEs.
(4) The fair value of the GMWB and GMAB embedded derivatives as of JuneSeptember 30, 2020 included $3.2$3.0 billion of individual contracts in a liability position and $25$36 million of individual contracts in an asset position. The fair value of the GMWB and GMAB embedded derivatives as of December 31, 2019 included $981 million of individual contracts in a liability position and $218 million of individual contracts in an asset position.
See Note 12 for additional information regarding the Company’s fair value measurement of derivative instruments.
4950
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
As of JuneSeptember 30, 2020 and December 31, 2019, investment securities with a fair value of $63$24 million and $84 million, respectively, were received as collateral to meet contractual obligations under derivative contracts, of which $63$24 million and $84 million, respectively, may be sold, pledged or rehypothecated by the Company. As of both JuneSeptember 30, 2020 and December 31, 2019, the Company had sold, pledged or rehypothecated NaN of these securities. In addition, as of both JuneSeptember 30, 2020 and December 31, 2019, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.
Derivatives Not Designated as Hedges
The following tables present a summary of the impact of derivatives not designated as hedging instruments, including embedded derivatives, on the Consolidated Statements of Operations:
Net Investment IncomeBanking and Deposit Interest ExpenseDistribution ExpensesInterest Credited to Fixed AccountsBenefits, Claims, Losses and Settlement ExpensesGeneral and Administrative ExpenseNet Investment IncomeBanking and Deposit Interest ExpenseDistribution ExpensesInterest Credited to Fixed AccountsBenefits, Claims, Losses and Settlement ExpensesGeneral and Administrative Expense
(in millions)(in millions)
Three Months Ended June 30, 2020
Three Months Ended September 30, 2020Three Months Ended September 30, 2020
Interest rate contractsInterest rate contracts$—  $—  $—  $—  $60  $—  Interest rate contracts$— $— $— $— $(371)$— 
Equity contractsEquity contracts(1) 5  87  63  (1,467) 13  Equity contracts0 2 41 42 (468)6 
Credit contractsCredit contracts—  —  —  —  (43) —  Credit contracts— — — — (12)— 
Foreign exchange contractsForeign exchange contracts(1) —  —  —  5  1  Foreign exchange contracts0 — — — (23)5 
GMWB and GMAB embedded derivativesGMWB and GMAB embedded derivatives—  —  —  —  147  —  GMWB and GMAB embedded derivatives— — — — 186 — 
IUL embedded derivativesIUL embedded derivatives—  —  —  (127) —  —  IUL embedded derivatives— — — (29)— — 
Fixed deferred indexed annuity
embedded derivatives		Fixed deferred indexed annuity
embedded derivatives		—  —  —  (7) —  —  Fixed deferred indexed annuity
embedded derivatives		— — — (3)— — 
Structured variable annuity
embedded derivatives		Structured variable annuity
embedded derivatives		—  —  —  —  (16) —  Structured variable annuity
embedded derivatives		— — — — (3)— 
SMC embedded derivativesSMC embedded derivatives—  (5) —  —  —  —  SMC embedded derivatives— (2)— — — — 
Total gain (loss)Total gain (loss)$(2) $—  $87  $(71) $(1,314) $14  Total gain (loss)$0 $0 $41 $10 $(691)$11 
Six Months Ended June 30, 2020
Nine Months Ended September 30, 2020Nine Months Ended September 30, 2020
Interest rate contractsInterest rate contracts$(1) $—  $2  $—  $2,575  $—  Interest rate contracts$(1)$— $2 $— $2,204 $— 
Equity contractsEquity contracts(1) (2) (29) (49) 526  (3) Equity contracts(1)0 12 (7)58 3 
Credit contractsCredit contracts—  —  —  —  (79) —  Credit contracts— — — — (91)— 
Foreign exchange contractsForeign exchange contracts—  —  —  —  49  (2) Foreign exchange contracts— — — — 26 3 
GMWB and GMAB embedded derivativesGMWB and GMAB embedded derivatives—  —  —  —  (2,366) —  GMWB and GMAB embedded derivatives— — — — (2,180)— 
IUL embedded derivativesIUL embedded derivatives—  —  —  37  —  —  IUL embedded derivatives— — — 8 — — 
Fixed deferred indexed annuity
embedded derivatives		Fixed deferred indexed annuity
embedded derivatives		—  —  —  5  —  —  Fixed deferred indexed annuity
embedded derivatives		— — — 2 — — 
Structured variable annuity
embedded derivatives		Structured variable annuity
embedded derivatives		—  —  —  —  (13) —  Structured variable annuity
embedded derivatives		— — — — (16)— 
SMC embedded derivativesSMC embedded derivatives—  2  —  —  —  —  SMC embedded derivatives— 0 — — — — 
Total gain (loss)Total gain (loss)$(2) $—  $(27) $(7) $692  $(5) Total gain (loss)$(2)$0 $14 $3 $1 $6 
5051
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Net Investment IncomeBanking and Deposit Interest ExpenseDistribution ExpensesInterest Credited to Fixed AccountsBenefits, Claims, Losses and Settlement ExpensesGeneral and Administrative ExpenseNet Investment IncomeBanking and Deposit Interest ExpenseDistribution ExpensesInterest Credited to Fixed AccountsBenefits, Claims, Losses and Settlement ExpensesGeneral and Administrative Expense
(in millions)(in millions)
Three Months Ended June 30, 2019
Three Months Ended September 30, 2019Three Months Ended September 30, 2019
Interest rate contractsInterest rate contracts$(19) $—  $—  $—  $626  $—  Interest rate contracts$(9)$— $1 $— $804 $— 
Equity contractsEquity contracts—  2  12  18  (217) 2  Equity contracts— 0 (1)4 (100)0 
Credit contractsCredit contracts1  —  —  —  (40) —  Credit contracts0 — — — (9)— 
Foreign exchange contractsForeign exchange contracts—  —  —  —  (4) —  Foreign exchange contracts— — — — 10 — 
GMWB and GMAB embedded derivativesGMWB and GMAB embedded derivatives—  —  —  —  (516) —  GMWB and GMAB embedded derivatives— — — — (756)— 
IUL embedded derivativesIUL embedded derivatives—  —  —  (43) —  —  IUL embedded derivatives— — — 22 — — 
Fixed deferred indexed annuity
embedded derivatives		—  —  —  (1) —  —  
SMC embedded derivativesSMC embedded derivatives— (1)— — — — 
Total gain (loss)Total gain (loss)$(18) $2  $12  $(26) $(151) $2  Total gain (loss)$(9)$(1)$0 $26 $(51)$0 
Six Months Ended June 30, 2019
Nine Months Ended September 30, 2019Nine Months Ended September 30, 2019
Interest rate contractsInterest rate contracts$(28) $—  $—  $—  $957  $—  Interest rate contracts$(37)$— $1 $— $1,761 $— 
Equity contractsEquity contracts—  8  60  66  (917) 10  Equity contracts— 8 59 70 (1,017)10 
Credit contractsCredit contracts—  —  —  —  (69) —  Credit contracts— — — — (78)— 
Foreign exchange contractsForeign exchange contracts—  —  —  —  (10) (1) Foreign exchange contracts— — — — 0 (1)
GMWB and GMAB embedded derivativesGMWB and GMAB embedded derivatives—  —  —  —  (368) —  GMWB and GMAB embedded derivatives— — — — (1,124)— 
IUL embedded derivativesIUL embedded derivatives—  —  —  (124) —  —  IUL embedded derivatives— — — (102)— — 
Fixed deferred indexed annuity
embedded derivatives		Fixed deferred indexed annuity
embedded derivatives		—  —  —  (3) —  —  Fixed deferred indexed annuity
embedded derivatives		— — — (3)— — 
SMC embedded derivativesSMC embedded derivatives—  (6) —  —  —  —  SMC embedded derivatives— (7)— — — — 
Total gain (loss)Total gain (loss)$(28) $2  $60  $(61) $(407) $9  Total gain (loss)$(37)$1 $60 $(35)$(458)$9 
The Company holds derivative instruments that either do not qualify or are not designated for hedge accounting treatment. These derivative instruments are used as economic hedges of equity, interest rate, credit and foreign currency exchange rate risk related to various products and transactions of the Company.
Certain annuity contracts contain GMWB or GMAB provisions, which guarantee the right to make limited partial withdrawals each contract year regardless of the volatility inherent in the underlying investments or guarantee a minimum accumulation value of consideration received at the beginning of the contract period, after a specified holding period, respectively. The indexed portion of structured variable annuities and the GMAB and non-life contingent GMWB provisions are considered embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. The Company economically hedges the aggregate exposure related to the indexed portion of structured variable annuities and the GMAB and non-life contingent GMWB provisions using options, swaptions, swaps and futures.
The deferred premium associated with certain of the above options and swaptions is paid or received semi-annually over the life of the contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options and swaptions as of JuneSeptember 30, 2020:
Premiums PayablePremiums Receivable Premiums PayablePremiums Receivable
(in millions) (in millions)
2020 (1)
2020 (1)
$82  $26  
2020 (1)
$35 $
20212021152  112  2021152 106 
20222022203  198  2022205 205 
20232023126  57  202351 43 
2024202471  10  2024140 25 
2025 - 20282025 - 2028377  7  2025 - 2028379 7 
TotalTotal$1,011  $410  Total$962 $390 
(1) 2020 amounts represent the amounts payable and receivable for the period from JulyOctober 1, 2020 to December 31, 2020.
5152
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Actual timing and payment amounts may differ due to future settlements, modifications or exercises of the contracts prior to the full premium being paid or received.
The Company has a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on its statutory surplus and to cover some of the residual risks not covered by other hedging activities. As a means of economically hedging these risks, the Company may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives may contain settlement provisions linked to both equity returns and interest rates. The Company’s macro hedge derivatives that contain settlement provisions linked to both equity returns and interest rates, if any, are shown in other contracts in the tables above.
Fixed deferred indexed annuity, IUL and stock market certificate products have returns tied to the performance of equity markets. As a result of fluctuations in equity markets, the obligation incurred by the Company related to fixed deferred indexed annuity, IUL and stock market certificate products will positively or negatively impact earnings over the life of these products. The equity component of fixed deferred indexed annuity, IUL and stock market certificate product obligations are considered embedded derivatives, which are bifurcated from their host contracts for valuation purposes and reported on the Consolidated Balance Sheets at fair value with changes in fair value reported in earnings. As a means of economically hedging its obligations under the provisions of these products, the Company enters into index options and futures contracts.
The Company enters into futures, credit default swaps and commodity swaps to manage its exposure to price risk arising from seed money investments in proprietary investment products. The Company enters into foreign currency forward contracts to economically hedge its exposure to certain foreign transactions. The Company enters into futures contracts and total return swaps to economically hedge its exposure related to compensation plans. The Company enters into interest rate swaps to offset interest rate changes on unrealized gains or losses for certain investments.
Cash Flow Hedges
The Company has designated derivative instruments as a cash flow hedge of interest rate exposure on forecasted debt interest payments. For derivative instruments that qualify as cash flow hedges, the gain or loss on the derivative instruments is reported in AOCI and reclassified into earnings when the hedged item or transaction impacts earnings. The amount that is reclassified into earnings is presented within the same line item as the earnings impact of the hedged item in interest and debt expense.
For the three months and sixnine months ended JuneSeptember 30, 2020 and 2019, the amounts reclassified from AOCI to earnings related to cash flow hedges were immaterial. The estimated net amount recorded in AOCI as of JuneSeptember 30, 2020 that the Company expects to reclassify to earnings as a reduction to interest and debt expense within the next twelve months is $1$0.5 million. Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is 15 years and relates to forecasted debt interest payments. See Note 15 for a rollforward of net unrealized derivative gains (losses) included in AOCI related to cash flow hedges.
Fair Value Hedges
The Company entered into and designated as a fair value hedge an interest rate swap to convert senior notes due 2020 from fixed rate debt to floating rate debt. The interest rate swap related to the senior notes due March 2020 was settled during the first quarter when the debt was repaid. The swap had identical terms as the underlying debt being hedged. The Company no longer had any fair value hedges outstanding as of September 30, 2020. The Company recognizes gains and losses on the derivatives and the related hedged items within interest and debt expense. See Note 11 for the cumulative basis adjustments for fair value hedges.
The following table is a summary of the impact of derivatives designated as hedges on the Consolidated Statements of Operations:
Three months ended June 30,Six Months Ended June 30,Three months ended September 30,Nine Months Ended September 30,
20202019202020192020201920202019
(in millions)(in millions)
Total interest and debt expense per Consolidated Statements of OperationsTotal interest and debt expense per Consolidated Statements of Operations$41  $59  $87  $112  Total interest and debt expense per Consolidated Statements of Operations$$52 $124 $
Gain (loss) on interest rate contracts designated as fair value hedges:Gain (loss) on interest rate contracts designated as fair value hedges:Gain (loss) on interest rate contracts designated as fair value hedges:
Hedged itemsHedged items$—  $1  $1  $2  Hedged items$— $1 $1 $3 
Derivatives designated as fair value hedgesDerivatives designated as fair value hedges—  (1) (1) (2) Derivatives designated as fair value hedges— (1)(1)(3)
Gain (loss) on interest rate contracts designated as cash flow hedges:Gain (loss) on interest rate contracts designated as cash flow hedges:Gain (loss) on interest rate contracts designated as cash flow hedges:
Amount of gain (loss) reclassified from AOCI into incomeAmount of gain (loss) reclassified from AOCI into income$—  $1  $—  $1  Amount of gain (loss) reclassified from AOCI into income$1 $0 $1 $1 
53
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Net Investment Hedges
The Company entered into, and designated as net investment hedges in foreign operations, forward contracts to hedge a portion of the Company’s foreign currency exchange rate risk associated with its investment in Threadneedle. As the Company determined that the forward contracts are effective, the change in fair value of the derivatives is recognized in AOCI as part of the foreign currency translation adjustment. For both the three months ended JuneSeptember 30, 2020 and 2019, the Company recognized a loss of $2.5 million and NaN, respectively, in OCI. For the nine months ended September 30, 2020 and 2019, the Company recognized a gain of NaN in
52
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
OCI. For the six months ended June 30, 2020 and 2019, the Company recognized a gain of $5$3 million and a loss of $3 million, respectively, in OCI.
Credit Risk
Credit risk associated with the Company’s derivatives is the risk that a derivative counterparty will not perform in accordance with the terms of the applicable derivative contract. To mitigate such risk, the Company has established guidelines and oversight of credit risk through a comprehensive enterprise risk management program that includes members of senior management. Key components of this program are to require preapproval of counterparties and the use of master netting and collateral arrangements whenever practical. See Note 13 for additional information on the Company’s credit exposure related to derivative assets.
Certain of the Company’s derivative contracts contain provisions that adjust the level of collateral the Company is required to post based on the Company’s debt rating (or based on the financial strength of the Company’s life insurance subsidiaries for contracts in which those subsidiaries are the counterparty). Additionally, certain of the Company’s derivative contracts contain provisions that allow the counterparty to terminate the contract if the Company’s debt does not maintain a specific credit rating (generally an investment grade rating) or the Company’s life insurance subsidiary does not maintain a specific financial strength rating. If these termination provisions were to be triggered, the Company’s counterparty could require immediate settlement of any net liability position. As of JuneSeptember 30, 2020 and December 31, 2019, the aggregate fair value of derivative contracts in a net liability position containing such credit contingent provisions was $193$176 million and $189 million, respectively. The aggregate fair value of assets posted as collateral for such instruments as of JuneSeptember 30, 2020 and December 31, 2019 was $193$176 million and $189 million, respectively. If the credit contingent provisions of derivative contracts in a net liability position as of JuneSeptember 30, 2020 and December 31, 2019 were triggered, the aggregate fair value of additional assets that would be required to be posted as collateral or needed to settle the instruments immediately would have been NaN as of both JuneSeptember 30, 2020 and December 31, 2019. 
15.  Shareholders’ Equity
The following tables provide the amounts related to each component of OCI:
Three Months Ended June 30,Three Months Ended September 30,
2020201920202019
PretaxIncome Tax Benefit (Expense)Net of TaxPretaxIncome Tax Benefit (Expense)Net of TaxPretaxIncome Tax Benefit (Expense)Net of TaxPretaxIncome Tax Benefit (Expense)Net of Tax
(in millions)(in millions)
Net unrealized gains (losses) on securities:Net unrealized gains (losses) on securities:Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising
during the period (1)
Net unrealized gains (losses) on securities arising
during the period (1)
$1,532  $(329) $1,203  $512  $(60) $452  
Net unrealized gains (losses) on securities arising during the period (1)
$225 $(53)$172 $294 $(58)$236 
Reclassification of net (gains) losses on securities
included in net income (2)
Reclassification of net (gains) losses on securities
included in net income (2)
(4) 1  (3) —  —  —  
Reclassification of net (gains) losses on securities included in net income (2)
(4)1 (3)10 (2)8 
Impact of DAC, DSIC, unearned revenue, benefit
reserves and reinsurance recoverables		Impact of DAC, DSIC, unearned revenue, benefit
reserves and reinsurance recoverables		(637) 134  (503) (259) 55  (204) Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables(94)20 (74)(195)41 (154)
Net unrealized gains (losses) on securitiesNet unrealized gains (losses) on securities891  (194) 697  253  (5) 248  Net unrealized gains (losses) on securities127 (32)95 109 (19)90 
Foreign currency translationForeign currency translation(8) —  (8) (15) 1  (14) Foreign currency translation27 0 27 (23)1 (22)
Total other comprehensive income (loss)Total other comprehensive income (loss)$883  $(194) $689  $238  $(4) $234  Total other comprehensive income (loss)$154 $(32)$122 $86 $(18)$68 
5354
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Six Months Ended June 30,Nine Months Ended September 30,
2020201920202019
PretaxIncome Tax Benefit (Expense)Net of TaxPretaxIncome Tax Benefit (Expense)Net of TaxPretaxIncome Tax Benefit (Expense)Net of TaxPretaxIncome Tax Benefit (Expense)Net of Tax
(in millions)(in millions)
Net unrealized gains (losses) on securities:Net unrealized gains (losses) on securities:Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on securities arising
during the period (1)
Net unrealized gains (losses) on securities arising
during the period (1)
$337  $(65) $272  $1,169  $(201) $968  
Net unrealized gains (losses) on securities arising during the period (1)
$562 $(118)$444 $1,463 $(259)$1,204 
Reclassification of net (gains) losses on securities
included in net income (2)
Reclassification of net (gains) losses on securities
included in net income (2)
4  (1) 3  (5) 1  (4) 
Reclassification of net (gains) losses on securities included in net income (2)
0 0 0 5 (1)4 
Impact of DAC, DSIC, unearned revenue, benefit
reserves and reinsurance recoverables		Impact of DAC, DSIC, unearned revenue, benefit
reserves and reinsurance recoverables		(129) 27  (102) (499) 105  (394) Impact of DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables(223)47 (176)(694)146 (548)
Net unrealized gains (losses) on securitiesNet unrealized gains (losses) on securities212  (39) 173  665  (95) 570  Net unrealized gains (losses) on securities339 (71)268 774 (114)660 
Net unrealized gains (losses) on derivatives:Net unrealized gains (losses) on derivatives:Net unrealized gains (losses) on derivatives:
Reclassification of net (gains) losses on
derivatives included in net income (3)
Reclassification of net (gains) losses on
derivatives included in net income (3)
—  —  —  (1) —  (1) 
Reclassification of net (gains) losses on derivatives included in net income (3)
0 0 0 (1)0 (1)
Net unrealized gains (losses) on derivativesNet unrealized gains (losses) on derivatives—  —  —  (1) —  (1) Net unrealized gains (losses) on derivatives0 0 0 (1)0 (1)
Foreign currency translationForeign currency translation(42) 1  (41) (9) —  (9) Foreign currency translation(15)1 (14)(32)1 (31)
Total other comprehensive income (loss)Total other comprehensive income (loss)$170  $(38) $132  $655  $(95) $560  Total other comprehensive income (loss)$324 $(70)$254 $741 $(113)$628 
(1) Includes impairments on Available-for-Sale securities related to factors other than credit that were recognized in OCI during the period.
(2) Reclassification amounts are recorded in net investment income.
(3) Includes NaN and $1 million pretax gain reclassified to interest and debt expense for the sixnine months ended JuneSeptember 30, 2020 and 2019, respectively.
Other comprehensive income (loss) related to net unrealized gains (losses) on securities includes three components: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period; (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities and due to the reclassification of noncredit impairments to credit losses; and (iii) other adjustments primarily consisting of changes in insurance and annuity asset and liability balances, such as DAC, DSIC, unearned revenue, benefit reserves and reinsurance recoverables, to reflect the expected impact on their carrying values had the unrealized gains (losses) been realized as of the respective balance sheet dates.
The following tables present the changes in the balances of each component of AOCI, net of tax:
Net Unrealized Gains (Losses) on SecuritiesNet Unrealized Gains (Losses) on DerivativesDefined
Benefit Plans		Foreign Currency TranslationOtherTotalNet Unrealized Gains (Losses) on SecuritiesNet Unrealized Gains (Losses) on DerivativesDefined
Benefit Plans		Foreign Currency TranslationOtherTotal
(in millions)(in millions)
Balance, April 1, 2020$52  $6  $(138) $(214) $(1) $(295) 
Balance, July 1, 2020Balance, July 1, 2020$749 $6 $(138)$(222)$(1)$394 
OCI before reclassificationsOCI before reclassifications700  —  —  (8) —  692  OCI before reclassifications98 0 0 27 0 125 
Amounts reclassified from AOCIAmounts reclassified from AOCI(3) —  —  —  —  (3) Amounts reclassified from AOCI(3)0 0 0 0 (3)
Total OCITotal OCI697  —  —  (8) —  689  Total OCI95 0 0 27 0 122 
Balance, June 30, 2020$749  (1)$6  $(138) $(222) $(1) $394  
Balance, September 30, 2020Balance, September 30, 2020$844 (1)$6 $(138)$(195)$(1)$516 
Balance, January 1, 2020Balance, January 1, 2020$576  $6  $(138) $(181) $(1) $262  Balance, January 1, 2020$576 $6 $(138)$(181)$(1)$262 
OCI before reclassificationsOCI before reclassifications170  —  —  (41) —  129  OCI before reclassifications268 0 0 (14)0 254 
Amounts reclassified from AOCI3  —  —  —  —  3  
Total OCITotal OCI173  —  —  (41) —  132  Total OCI268 0 0 (14)0 254 
Balance, June 30, 2020$749  (1)$6  $(138) $(222) $(1) $394  
Balance, September 30, 2020Balance, September 30, 2020$844 (1)$6 $(138)$(195)$(1)$516 
5455
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Net Unrealized Gains (Losses) on SecuritiesNet Unrealized Gains (Losses) on DerivativesDefined
Benefit Plans		Foreign Currency TranslationOtherTotalNet Unrealized Gains (Losses) on SecuritiesNet Unrealized Gains (Losses) on DerivativesDefined
Benefit Plans		Foreign Currency TranslationOtherTotal
(in millions)(in millions)
Balance, April 1, 2019$342  $7  $(120) $(193) $(1) $35  
Balance, July 1, 2019Balance, July 1, 2019$590 $7 $(120)$(207)$(1)$269 
OCI before reclassificationsOCI before reclassifications248  —  —  (14) —  234  OCI before reclassifications82 0 0 (22)0 60 
Amounts reclassified from AOCIAmounts reclassified from AOCI—  —  —  —  —  —  Amounts reclassified from AOCI8 0 0 0 0 8 
Total OCITotal OCI248  —  —  (14) —  234  Total OCI90 0 0 (22)0 68 
Balance, June 30, 2019$590  (1)$7  $(120) $(207) $(1) $269  
Balance, September 30, 2019Balance, September 30, 2019$680 (1)$7 $(120)$(229)$(1)$337 
Balance, January 1, 2019Balance, January 1, 2019$20  $8  $(120) $(198) $(1) $(291) Balance, January 1, 2019$20 $8 $(120)$(198)$(1)$(291)
OCI before reclassificationsOCI before reclassifications574  —  —  (9) —  565  OCI before reclassifications656 0 0 (31)0 625 
Amounts reclassified from AOCIAmounts reclassified from AOCI(4) (1) —  —  —  (5) Amounts reclassified from AOCI4 (1)0 0 0 3 
Total OCITotal OCI570  (1) —  (9) —  560  Total OCI660 (1)0 (31)0 628 
Balance, June 30, 2019$590  (1)$7  $(120) $(207) $(1) $269  
Balance, September 30, 2019Balance, September 30, 2019$680 (1)$7 $(120)$(229)$(1)$337 
(1) Includes nilNaN and $(1) million of noncredit related impairments on securities and net unrealized gains (losses) on previously impaired securities as of JuneSeptember 30, 2020 and JuneSeptember 30, 2019, respectively.respectively.
For the sixnine months ended JuneSeptember 30, 2020 and 2019, the Company repurchased a total of 4.36.3 million shares and 5.89.8 million shares, respectively, of its common stock for an aggregate cost of $637$956 million and $791 million,$1.3 billion, respectively. In April 2017,February 2019, the Company’s Board of Directors authorized a repurchase of up to $2.5 billion of the Company’s common stock through March 31, 2021. In August 2020, the Company’s Board of Directors authorized an additional expenditure of up to $2.5 billion for the repurchase of shares of the Company’s common stock through JuneSeptember 30, 2019, which was exhausted in the second quarter of 2019. In February 2019, the Company’s Board of Directors authorized an additional repurchase up to $2.5 billion of the Company’s common stock through March 31, 2021.2022. As of JuneSeptember 30, 2020, the Company had $473 million$2.7 billion remaining under thisthese share repurchase authorization.authorizations.
The Company may also reacquire shares of its common stock under its share-based compensation plans related to restricted stock awards and certain option exercises. The holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligation. These vested restricted shares are reacquired by the Company and the Company’s payment of the holders’ income tax obligations are recorded as a treasury share purchase.
For the sixnine months ended JuneSeptember 30, 2020 and 2019, the Company reacquired 0.3 million shares and 0.3 million shares, respectively, of its common stock through the surrender of shares upon vesting and paid in the aggregate $47$51 million and $30$34 million, respectively, related to the holders’ income tax obligations on the vesting date. Option holders may elect to net settle their vested awards resulting in the surrender of the number of shares required to cover the strike price and tax obligation of the options exercised. These shares are reacquired by the Company and recorded as treasury shares. For the sixnine months ended JuneSeptember 30, 2020 and 2019, the Company reacquired 0.60.7 million shares and 0.40.5 million shares, respectively, of its common stock through the net settlement of options for an aggregate value of $110$128 million and $51$70 million, respectively.
During the sixnine months ended JuneSeptember 30, 2020 and 2019, the Company reissued 0.5 million and 0.7 million, respectively, treasury shares for restricted stock award grants, performance share units and issuance of shares vested under advisor deferred compensation plans.
16.  Income Taxes
The Company’s effective tax rate was (2.4%)23.5% and 16.1%15.4% for the three months ended JuneSeptember 30, 2020 and 2019, respectively. The Company’s effective tax rate was 18.0%17.4% and 16.0%15.8% for the sixnine months ended JuneSeptember 30, 2020 and 2019, respectively.
The Company hadrecorded a negative tax rate of (2.4%)pretax loss for the three months ended JuneSeptember 30, 2020. This negative tax rate is a result of an income tax expenseTax benefits applied to a pretax loss increase the effective tax rate. The effective tax rate for the current quarter. The incomethree months ended September 30, 2020 is higher than the statutory tax expense is primarilyrate due to the reversal of the net operating loss (“NOL”) benefit recorded in the quarter ended March 31, 2020. The Company is no longer forecasting a 2020 NOL due to strong equity market appreciation in the second quarter, which was a reversal of the equity market dislocation experienced in March. The NOL benefit reversal is partially offset by tax preferred itemsbenefits including low income housing tax credits forand the three months ended June 30, 2020.dividends received deduction. The effective tax rate for the sixnine months ended JuneSeptember 30, 2020 is lower than the statutory rate as a result of tax preferred items including low income housing tax credits and dividends received deduction, partially offset by state income taxes, net of federal benefit.
The effective tax rate for the three months ended JuneSeptember 30, 2019 is lower than the statutory rate as a result of tax preferred items including low income housing tax credits and dividends received deduction. The effective tax rate for the nine months ended September 30, 2019 is lower than the statutory rate as a result of tax preferred items including low income housing tax credits and foreign tax credits. The effective tax rate for the six months ended June 30, 2019 is lower than the statutory rate as a result of tax preferred items including foreign tax credits and low income housing tax credits, partially offset by lower income for the six months ended June 30, 2019 relative to income expected for the full year.
5556
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
The lowerhigher effective tax rate for the three months ended JuneSeptember 30, 2020 compared to JuneSeptember 30, 2019 is primarily the result of a pretax loss in the NOL benefit reversal and the pretax loss.current quarter. The higher effective tax rate for the sixnine months ended JuneSeptember 30, 2020 compared to JuneSeptember 30, 2019 is primarily the result of a decrease in tax preferred items, including foreign tax credits and dividends received deduction, partially offset by lower full year projected pretax income in the current period compared to the prior period.credits.
Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of $20$18 million, net of federal benefit, which will expire beginning December 31, 2020.
The Company is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. Significant judgment is required in determining if a valuation allowance should be established, and the amount of such allowance if required. Factors used in making this determination include estimates relating to the performance of the business. Consideration is given to, among other things in making this determination, (i) future taxable income exclusive of reversing temporary differences and carryforwards, (ii) future reversals of existing taxable temporary differences, (iii) taxable income in prior carryback years, and (iv) tax planning strategies. Based on analysis of the Company’s tax position, management believes it is more likely than not that the Company will not realize certain state net operating losses of $13$10 million and state deferred tax assets of $4$2 million; therefore a valuation allowance has been established. The valuation allowance was $17$12 million and $19 million as of JuneSeptember 30, 2020 and December 31, 2019, respectively.
As of JuneSeptember 30, 2020 and December 31, 2019, the Company had $102$111 million and $100 million, respectively, of gross unrecognized tax benefits. If recognized, approximately $73$82 million and $67 million, net of federal tax benefits, of unrecognized tax benefits as of JuneSeptember 30, 2020 and December 31, 2019, respectively, would affect the effective tax rate.
It is reasonably possible that the total amount of unrecognized tax benefits will change in the next 12 months. The Company estimates that the total amount of gross unrecognized tax benefits may decrease by NaN to $10 million in the next 12 months primarily due to Internal Revenue Service (“IRS”) settlements and state exams.
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company recognized nil and a net increase of $1 million in interest and penalties for the three months and six months ended June 30, 2020, respectively. The Company recognized a net increase of $1 million and $2 million in interest and penalties for the three months and sixnine months ended JuneSeptember 30, 2020, respectively. The Company recognized a net decrease of $1 million and a net increase of $1 million in interest and penalties for the three months and nine months ended September 30, 2019, respectively. As of JuneSeptember 30, 2020 and December 31, 2019, the Company had a payable of $9$10 million and $8 million, respectively, related to accrued interest and penalties.
The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The federal statute of limitations are closed on years through 2015, except for one issue for 2014 and 2015 which was claimed on amended returns. The IRS is currently auditing the Company’s U.S. income tax returns for 2016, 2017 and 2018. The Company’s state income tax returns are currently under examination by various jurisdictions for years ranging from 2010 through 2018. In the United Kingdom (“UK”), Her Majesty’s Revenue and Customs is performing a business risk review of the Company’s UK subsidiaries for the 2016 tax year.
17.  Contingencies
Contingencies
The Company and its subsidiaries are involved in the normal course of business in legal proceedings which include regulatory inquiries, arbitration and litigation, including class actions, concerning matters arising in connection with the conduct of its activities as a diversified financial services firm. These include proceedings specific to the Company as well as proceedings generally applicable to business practices in the industries in which it operates. The Company can also be subject to legal proceedings arising out of its general business activities, such as its investments, contracts, leases and employment relationships. Uncertain economic conditions, heightened and sustained volatility in the financial markets and significant financial reform legislation may increase the likelihood that clients and other persons or regulators may present or threaten legal claims or that regulators increase the scope or frequency of examinations of the Company or the financial services industry generally.
As with other financial services firms, the level of regulatory activity and inquiry concerning the Company’s businesses remains elevated. From time to time, the Company receives requests for information from, and/or has been subject to examination or claims by, the SEC, the Financial Industry Regulatory Authority, the OCC, the UK Financial Conduct Authority, the Federal Reserve Board, state insurance and securities regulators, state attorneys general and various other domestic or foreign governmental and quasi-governmental authorities on behalf of themselves or clients concerning the Company’s business activities and practices, and the practices of the Company’s financial advisors. The Company typically has numerous pending matters which include information requests, exams or inquiries regarding certain subjects, including: sales and distribution of mutual funds, exchange traded funds, annuities, equity and fixed income securities, real estate investment trusts, insurance products, and financial advice offerings, including managed accounts; supervision of the Company’s financial advisors and other associated persons; administration of insurance and annuity claims; security of client information; trading activity and the Company’s monitoring and supervision of such activity; and transaction monitoring systems and controls. The Company has cooperated and will continue to cooperate with the applicable regulators.
5657
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
These legal proceedings are subject to uncertainties and, as such, it is inherently difficult to determine whether any loss is probable or even reasonably possible, or to reasonably estimate the amount of any loss. The Company cannot predict with certainty if, how or when any such proceedings will be initiated or resolved. Matters frequently need to be more developed before a loss or range of loss can be reasonably estimated for any proceeding. An adverse outcome in one or more proceedings could eventually result in adverse judgments, settlements, fines, penalties or other sanctions, in addition to further claims, examinations or adverse publicity that could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.
In accordance with applicable accounting standards, the Company establishes an accrued liability for contingent litigation and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably estimated. The Company discloses the nature of the contingency when management believes there is at least a reasonable possibility that the outcome may be material to the Company’s consolidated financial statements and, where feasible, an estimate of the possible loss. In such cases, there still may be an exposure to loss in excess of any amounts reasonably estimated and accrued. When a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrued liability, but continues to monitor, in conjunction with any outside counsel handling a matter, further developments that would make such loss contingency both probable and reasonably estimable. Once the Company establishes an accrued liability with respect to a loss contingency, the Company continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established, and any appropriate adjustments are made each quarter.
Guaranty Fund Assessments
RiverSource Life and RiverSource Life of NY are required by law to be a member of the guaranty fund association in every state where they are licensed to do business. In the event of insolvency of one or more unaffiliated insurance companies, the Company could be adversely affected by the requirement to pay assessments to the guaranty fund associations. The Company projects its cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations (“NOLHGA”) and the amount of its premiums written relative to the industry-wide premium in each state. The Company accrues the estimated cost of future guaranty fund assessments when it is considered probable that an assessment will be imposed, the event obligating the Company to pay the assessment has occurred and the amount of the assessment can be reasonably estimated.
The Company has a liability for estimated guaranty fund assessments and a related premium tax asset. As of both JuneSeptember 30, 2020 and December 31, 2019, the estimated liability was $12 million. As of both JuneSeptember 30, 2020 and December 31, 2019, the related premium tax asset was $10 million. The expected period over which guaranty fund assessments will be made and the related tax credits recovered is not known.
18.  Earnings per Share
The computations of basic and diluted earnings per share is as follows:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended September 30,Nine Months Ended September 30,
20202019202020192020201920202019
(in millions, except per share amounts)(in millions, except per share amounts)
Numerator:Numerator:Numerator:
Net incomeNet income$(539) $492  $1,497  $887  Net income$(140)$543 $1,357 $
Denominator:Denominator:Denominator:
Basic: Weighted-average common shares outstandingBasic: Weighted-average common shares outstanding125.0  136.1  125.7  137.4  Basic: Weighted-average common shares outstanding123.0 132.7 124.8 135.8 
Effect of potentially dilutive nonqualified stock options and other share-based awardsEffect of potentially dilutive nonqualified stock options and other share-based awards1.2  1.9  1.5  1.7  Effect of potentially dilutive nonqualified stock options and other share-based awards1.9 1.8 1.7 1.7 
Diluted: Weighted-average common shares outstandingDiluted: Weighted-average common shares outstanding126.2  138.0  127.2  139.1  Diluted: Weighted-average common shares outstanding124.9 134.5 126.5 137.5 
Earnings per share:Earnings per share:Earnings per share:
BasicBasic$(4.31) $3.61  $11.91  $6.46  Basic$(1.14)$4.09 $10.87 $10.53 
DilutedDiluted$(4.31) (1)$3.57  $11.77  $6.38  Diluted$(1.14)(1)$4.04 $10.73 $10.40 
(1) Diluted shares used in this calculation represent basic shares due to the net loss. Using actual diluted shares would result in anti-dilution.
The calculation of diluted earnings per share excludes the incremental effect of 1.5 million and 1.0 million options as of JuneSeptember 30, 2020 and 2019, respectively, due to their anti-dilutive effect.
5758
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
19.  Segment Information
During the third quarter of 2020, as the Company continues to reposition its business and implement strategies focusing on product features and sales, the composition of its reportable segments changed from five to four segments. The Chief Operating Decision Maker (“CODM”) manages the Annuities and Protection business as one operating segment, referred to as Retirement & Protection Solutions. The Retirement & Protection Solutions segment includes Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, the Company moved the Fixed Annuities and Fixed Indexed Annuities business to the Corporate & Other segment as a closed block. These segment reporting changes align with the way the CODM began assessing the performance of the Company’s reportable segments and other business activities effective in the third quarter of 2020. Certain prior period amounts have been revised to conform to the current presentation. The Company’s four reporting segments are Advice & Wealth Management, Asset Management, Annuities,Retirement & Protection Solutions and Corporate & Other.
The accounting policies of the segments are the same as those of the Company, except for operating adjustments defined below, the method of capital allocation, the accounting for gains (losses) from intercompany revenues and expenses and not providing for income taxes on a segment basis.
Management uses segment adjusted operating measures in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by some securities analysts and investors. Consistent with GAAP accounting guidance for segment reporting, adjusted operating earnings is the Company’s measure of segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. The Company believes the presentation of segment adjusted operating earnings, as the Company measures it for management purposes, enhances the understanding of its business by reflecting the underlying performance of its core operations and facilitating a more meaningful trend analysis.
Effective first quarter of 2019, management has excludedManagement excludes mean reversion related impacts from the Company’s adjusted operating measures. The mean reversion related impact is defined as the impact on variable annuity and VUL products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves.
Adjusted operating earnings is defined as adjusted operating net revenues less adjusted operating expenses. Adjusted operating net revenues and adjusted operating expenses exclude the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization, and the reinsurance accrual), mean reversion related impacts (the impact on variable annuity and VUL products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves), integration and restructuring charges and the impact of consolidating investment entities. Adjusted operating net revenues also exclude net realized investment gains or losses (net of unearned revenue amortization and the reinsurance accrual) and the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments. Adjusted operating expenses also exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), and the DSIC and DAC amortization offset to net realized investment gains or losses. The market impact on variable annuity guaranteed benefits, fixed index annuity benefits and IUL benefits includes changes in embedded derivative values caused by changes in financial market conditions, net of changes in economic hedge values and unhedged items including the difference between assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and certain policyholder contract elections, net of related impacts on DAC and DSIC amortization. The market impact also includes certain valuation adjustments made in accordance with FASB Accounting Standards Codification 820, Fair Value Measurements and Disclosures, including the impact on embedded derivative values of discounting projected benefits to reflect a current estimate of the Company’s life insurance subsidiary’s nonperformance spread.
The following tables summarize selected financial information by segment and reconcile segment totals to those reported on the consolidated financial statements:
June 30, 2020December 31, 2019 September 30, 2020December 31, 2019
(in millions) (in millions)
Advice & Wealth ManagementAdvice & Wealth Management$19,911  $17,607  Advice & Wealth Management$20,558 $
Asset ManagementAsset Management7,964  8,226  Asset Management8,143 8,226 
Annuities99,847  98,195  
Protection17,342  16,980  
Retirement & Protection SolutionsRetirement & Protection Solutions107,411 104,227 
Corporate & OtherCorporate & Other9,838  10,820  Corporate & Other22,575 21,768 
Total assetsTotal assets$154,902  $151,828  Total assets$158,687 $151,828 
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AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended September 30,Nine Months Ended September 30,
20202019202020192020201920202019
(in millions)(in millions)
Adjusted operating net revenues:Adjusted operating net revenues:Adjusted operating net revenues:
Advice & Wealth ManagementAdvice & Wealth Management$1,537  $1,653  $3,232  $3,207  Advice & Wealth Management$1,667 $1,682 $4,899 $4,889 
Asset ManagementAsset Management668  712  1,354  1,401  Asset Management739 742 2,093 2,143 
Annuities583  620  1,172  1,224  
Protection257  259  514  521  
Retirement & Protection SolutionsRetirement & Protection Solutions781 788 2,295 2,337 
Corporate & OtherCorporate & Other46  352  108  694  Corporate & Other132 450 412 1,340 
Less: Eliminations (1)(2)
Less: Eliminations (1)(2)
326  349  664  682  
Less: Eliminations (1)(2)
342 362 1,006 1,044 
Total segment adjusted operating net revenuesTotal segment adjusted operating net revenues2,765  3,247  5,716  6,365  Total segment adjusted operating net revenues2,977 3,300 8,693 9,665 
Net realized gains (losses)Net realized gains (losses)(3) —  (23) 9  Net realized gains (losses)4 (13)(19)(4)
Revenue attributable to consolidated investment entitiesRevenue attributable to consolidated investment entities15  24  31  45  Revenue attributable to consolidated investment entities21 22 52 67 
Market impact on IUL benefits, netMarket impact on IUL benefits, net(66) (8) (11) (25) Market impact on IUL benefits, net1 17 (10)(8)
Mean reversion related impacts1  —  —  —  
Market impact of hedges on investmentsMarket impact of hedges on investments—  (18) —  (28) Market impact of hedges on investments0 (9)0 (37)
Integration and restructuring chargesIntegration and restructuring charges—  —  —  (3) Integration and restructuring charges0 0 0 (3)
Total net revenues per Consolidated Statements of OperationsTotal net revenues per Consolidated Statements of Operations$2,712  $3,245  $5,713  $6,363  Total net revenues per Consolidated Statements of Operations$3,003 $3,317 $8,716 $9,680 
(1) Represents the elimination of intersegment revenues recognized for the three months ended JuneSeptember 30, 2020 and 2019 in each segment as follows: Advice & Wealth Management ($208219 million and $230$240 million, respectively); Asset Management ($13 million and $14$13 million, respectively); AnnuitiesRetirement & Protection Solutions ($90110 million and $91 million, respectively); Protection ($15 million and $15$110 million, respectively); and Corporate & Other (NaN and $(1) million, respectively).
(2) Represents the elimination of intersegment revenues recognized for the sixnine months ended JuneSeptember 30, 2020 and 2019 in each segment as follows: Advice & Wealth Management ($430649 million and $449$689 million, respectively); Asset Management ($2639 million and $27$40 million, respectively); AnnuitiesRetirement & Protection Solutions ($180319 million and $179 million, respectively); Protection ($29 million and $30$319 million, respectively); and Corporate & Other ($(1) million and $(3)$(4) million, respectively).
 Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(in millions)
Adjusted operating earnings:
Advice & Wealth Management$271  $376  $649  $726  
Asset Management141  164  298  310  
Annuities155  129  250  257  
Protection70  65  142  139  
Corporate & Other(60) (61) (110) (124) 
Total segment adjusted operating earnings577  673  1,229  1,308  
Net realized gains (losses)(2) —  (22) 9  
Net income (loss) attributable to consolidated investment entities—  1  (2) 1  
Market impact on variable annuity guaranteed benefits, net(988) (60) 701  (202) 
Market impact on IUL benefits, net(122) (26) (31) (77) 
Market impact on fixed annuity benefits, net(3) 1  —  1  
Mean reversion related impacts14  18  (47) 54  
Market impact of hedges on investments—  (18) —  (28) 
Integration and restructuring charges(2) (2) (3) (9) 
Pretax income per Consolidated Statements of Operations$(526) $587  $1,825  $1,057  

 Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in millions)
Adjusted operating earnings:
Advice & Wealth Management$320 $396 $969 $1,122 
Asset Management198 173 496 483 
Retirement & Protection Solutions(89)165 300 545 
Corporate & Other(202)(79)(309)(187)
Total segment adjusted operating earnings227 655 1,456 1,963 
Net realized gains (losses)4 (11)(18)(2)
Net income (loss) attributable to consolidated investment entities0 (1)(2)0 
Market impact on variable annuity guaranteed benefits, net(427)(2)274 (204)
Market impact on IUL benefits, net(4)48 (35)(29)
Market impact on fixed annuity benefits, net— (1)0 0 
Mean reversion related impacts17 (36)(30)18 
Market impact of hedges on investments0 (9)0 (37)
Integration and restructuring charges(1)(2)(4)(11)
Pretax income per Consolidated Statements of Operations$(184)$641 $1,641 $1,698 
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AMERIPRISE FINANCIAL, INC. 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the “Forward-Looking Statements” that follow and our Consolidated Financial Statements and Notes presented in Item 1. Our Management’s Discussion and Analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020 (“2019 10-K”), as well as our current reports on Form 8-K and other publicly available information. References below to “Ameriprise Financial,” “Ameriprise,” the “Company,” “we,” “us,” and “our” refer to Ameriprise Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries.
Overview
Ameriprise Financial is a diversified financial services company with a more than 125-year history of providing financial solutions. We are a long-standing leader in financial planning and advice with $947 billionnearly $1 trillion in assets under management and administration as of JuneSeptember 30, 2020. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives.
The coronavirus disease 2019 (‘‘COVID-19’’) pandemic presents ongoing significant economic and societal disruption and market volatility, which has had and will continue to have ongoing impacts to our business and operating environment driven by a low interest rate environment and significant volatility in the interest rate and equity markets and the potential associated implications to client behavior. There are no reliable estimates of how long the pandemic will last, how many people are likely to be affected by it, or its impact on the overall economy.
We continue to implement comprehensive strategies to navigate the operating environment spurred by the pandemic. During the first quarter, we implemented a work-from-home protocol for virtually all of our employee population, restricted business travel, and provided resources for complying with the guidance from the World Health Organization, the U.S. Centers for Disease Control and governments. We have begun a thoughtful phased reopening of our offices in variousoffice locations while complying with applicable health agencies’ guidelines and governmental orders. We continue to operate successfully and satisfy elevated customer service volumes in this unique time - client service and the health and safety of our clients, advisors and employees remain our priorities while our employees and advisors have various work arrangements. The pandemic strategy we have employed is flexible and scalable, recognizing this pandemic is widespread and may occur in multiple waves, affecting different communities at different times with varying levels of severity.
There was significant economic volatility during the first half of 2020 and our results of operations have been, and will likely continue to be, adversely affected by the COVID-19 pandemic. There is still uncertainty surrounding the magnitude, duration, speed and reach of the ongoing global pandemic, as well as the impact of actions that have been or could be taken by governmental authorities, clients or other third parties. While we have successfully adapted to a virtual work environment and deployed numerous adaptive business strategies in recent months,so far this year, we believe the pandemic and its accompanying impact on the global financial markets and on our operations and financial results willmay cause results not to be comparable to the same period in previous years. The results presented in this report are not necessarily indicative of future operating results. For further information regarding the impact of the COVID-19 pandemic, and any potentially material effects, see Item 1A, “Risk Factors” in this report.
The products and services we provide retail clients and, to a lesser extent, institutional clients, are the primary source of our revenues and net income. Revenues and net income are significantly affected by investment performance and the total value and composition of assets we manage and administer for our retail and institutional clients as well as the distribution fees we receive from other companies. These factors, in turn, are largely determined by overall investment market performance and the depth and breadth of our individual client relationships.
Financial markets and macroeconomic conditions have had and will continue to have a significant impact on our operating and performance results. In addition, the business, political and regulatory environments in which we operate are subject to elevated uncertainty and substantial, frequent change, particularly given the ongoing COVID-19 pandemic. Accordingly, we expect to continue focusing on our key strategic objectives and obtaining operational and strategic leverage from our core capabilities. The success of these and other strategies may be affected by the factors discussed in Item 1A, “Risk Factors” in our 2019 10-K and other factors as discussed herein.
Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the “spread” income generated on our fixed deferred annuities, fixed insurance, deposit products and the fixed portion of variable annuities and variable insurance contracts, the value of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) assets, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits.benefits and the “spread” income generated on our fixed deferred annuities, fixed insurance, the fixed portion of variable annuities and variable insurance contracts and deposit products.
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AMERIPRISE FINANCIAL, INC. 
Earnings, as well as adjusted operating earnings after tax, will be negatively impacted by the ongoing low interest rate environment should it continue. In addition to continuing spread compression in our interest sensitive product lines, a sustained low interest rate
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AMERIPRISE FINANCIAL, INC. 
environment may result in increases to our reserves and changes in various rate assumptions we use to amortize DAC and DSIC, which may negatively impact our adjusted operating earnings after tax. For example, should our best estimate of ultimate long-term interest rate assumptions decrease by 125-150 basis points and the grading period be extended by 2-3 years, our adjusted operating earnings after tax could decline by $200 million to $300 million, primarily reflecting immediate increases in long term care reserves and accelerated amortization of DAC associated with our in-force variable annuity and universal life products. A change in our best estimate of the ultimate long-term interest rate assumptions would not impact our excess capital. For additional discussion on our interest rate risk, see Item 3. “Quantitative and Qualitative Disclosures About Market Risk.”
In the third quarter, we updated our market-related assumptions and implemented model changes related to our living benefit valuation. In addition, we conducted our annual review of life insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. We also reviewed our active life future policy benefit reserve adequacy for our long term care (“LTC”) business in the third quarter. See our Consolidated and Segment Results of Operations sections for the pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.
During the third quarter of 2020, as we continue to reposition the business and implement strategies focusing on product features and sales, the composition of our reportable segments changed from five to four segments. The Chief Operating Decision Maker (“CODM”) now manages the Annuities and Protection business as one operating segment, referred to as Retirement & Protection Solutions. The Retirement & Protection Solutions segment will include Retirement Solutions (Variable Annuities and Payout Annuities) and Protection Solutions (Life and Disability Insurance). In addition, we moved the Fixed Annuities and Fixed Indexed Annuities business to the Corporate & Other segment as a closed block. These segment reporting changes align with the way our CODM began assessing the performance of our reportable segments and other business activities effective in the third quarter of 2020. Certain prior period amounts have been revised to conform to the current presentation. These changes have no impact on previously reported consolidated balance sheets or statements of operations, comprehensive income, stockholders equity, or cash flows.
On October 1, 2019, we completed the sale of our Ameriprise Auto & Home Insurance business (“AAH”) to American Family Insurance Mutual Holding Company (American Family Insurance). This sale is consistent with our focus on our core growth areas of Advice & Wealth Management and Asset Management.
We consolidate certain variable interest entities for which we provide asset management services. These entities are defined as consolidated investment entities (“CIEs”). While the consolidation of the CIEs impacts our balance sheet and income statement, our exposure to these entities is unchanged and there is no impact to the underlying business results. For further information on CIEs, see Note 5 to our Consolidated Financial Statements. The results of operations of the CIEs are reflected in the Corporate & Other segment. On a consolidated basis, the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses are eliminated and the changes in the fair value of assets and liabilities related to the CIEs, primarily syndicated loans and debt, are reflected in net investment income. We include the fees from these entities in the management and financial advice fees line within our Asset Management segment.
While our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on variable annuity guaranteed benefits, net of hedges and the related DSIC and DAC amortization; the market impact on indexed universal life (“IUL”) benefits, net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on fixed index annuity benefits, net of hedges and the related DAC amortization; mean reversion related impacts (the impact on variable annuity and VULvariable universal life (“VUL”) products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves); the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. Management uses these non-GAAP measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors. Also, certain of these non-GAAP measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Throughout our Management’s Discussion and Analysis, these non-GAAP measures are referred to as adjusted operating measures. These non-GAAP measures should not be viewed as a substitute for U.S. GAAP measures.
It is management’s priority to increase shareholder value over a multi-year horizon by achieving our on-average, over-time financial targets.
Our financial targets are:
•Adjusted operating earnings per diluted share growth of 12% to 15%, and
•Adjusted operating return on equity excluding accumulated other comprehensive income (“AOCI”) of over 30%.
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AMERIPRISE FINANCIAL, INC. 
The following tables reconcile our GAAP measures to adjusted operating measures:
Per Diluted SharePer Diluted Share
Three Months Ended June 30,Three Months Ended June 30,Three Months Ended September 30,Three Months Ended September 30,
20202019202020192020201920202019
(in millions, except per share amounts)(in millions, except per share amounts)
Net income (loss)Net income (loss)$(539) $492  $(4.31) (3)3.57  Net income (loss)$(140)$543 $(1.14)4.04 
Add: Basic to diluted share conversionAdd: Basic to diluted share conversion—  —  0.04  (4)—  Add: Basic to diluted share conversion— — 0.02 (4)— 
Less: Net income (loss) attributable to CIEsLess: Net income (loss) attributable to CIEs—  1  —  0.01  Less: Net income (loss) attributable to CIEs— (1)— (0.01)
Add: Integration/restructuring charges (1)
Add: Integration/restructuring charges (1)
2  2  0.02  0.01  
Add: Integration/restructuring charges (1)
1 2 0.01 0.01 
Add: Market impact on variable annuity guaranteed benefits (1)
Add: Market impact on variable annuity guaranteed benefits (1)
988  60  7.83  0.44  
Add: Market impact on variable annuity guaranteed benefits (1)
427 2 3.42 0.01 
Add: Market impact on fixed index annuity benefits (1)
Add: Market impact on fixed index annuity benefits (1)
3  (1) 0.02  (0.01) 
Add: Market impact on fixed index annuity benefits (1)
— 1 — 0.01 
Add: Market impact on IUL benefits (1)
Add: Market impact on IUL benefits (1)
122  26  0.97  0.19  
Add: Market impact on IUL benefits (1)
4 (48)0.03 (0.36)
Add: Mean reversion related impacts (1)
Add: Mean reversion related impacts (1)
(14) (18) (0.12) (0.13) 
Add: Mean reversion related impacts (1)
(17)36 (0.14)0.27 
Add: Market impact of hedges on investments (1)
Add: Market impact of hedges on investments (1)
—  18  —  0.13  
Add: Market impact of hedges on investments (1)
— 9 — 0.07 
Less: Net realized investment gains (losses) (1)
Less: Net realized investment gains (losses) (1)
(2) —  (0.02) —  
Less: Net realized investment gains (losses) (1)
4 (11)0.03 (0.08)
Tax effect of adjustments (2)
Tax effect of adjustments (2)
(231) (18) (1.83) (0.13) 
Tax effect of adjustments (2)
(87)(3)(0.70)(0.02)
Adjusted operating earningsAdjusted operating earnings$333  $560  $2.64  $4.06  Adjusted operating earnings$184 $554 $1.47 $4.12 
Weighted average common shares outstanding:Weighted average common shares outstanding:    Weighted average common shares outstanding:    
BasicBasic125.0  136.1    Basic123.0 132.7   
DilutedDiluted126.2  138.0    Diluted124.9 134.5   
Per Diluted Share Per Diluted Share
Six Months Ended June 30,Six Months Ended June 30,Nine Months Ended September 30,Nine Months Ended September 30,
20202019202020192020201920202019
(in millions, except per share amounts)(in millions, except per share amounts)
Net incomeNet income$1,497  $887  $11.77  $6.38  Net income$1,357 $1,430 $10.73 $10.40 
Less: Net income (loss) attributable to CIEsLess: Net income (loss) attributable to CIEs(2) 1  (0.02) 0.01  Less: Net income (loss) attributable to CIEs(2)— (0.01)— 
Add: Integration/restructuring charges (1)
Add: Integration/restructuring charges (1)
3  9  0.02  0.06  
Add: Integration/restructuring charges (1)
4 11 0.03 0.08 
Add: Market impact on variable annuity guaranteed benefits (1)
Add: Market impact on variable annuity guaranteed benefits (1)
(701) 202  (5.51) 1.46  
Add: Market impact on variable annuity guaranteed benefits (1)
(274)204 (2.17)1.48 
Add: Market impact on fixed index annuity benefits (1)
Add: Market impact on fixed index annuity benefits (1)
—  (1) —  (0.01) 
Add: Market impact on fixed index annuity benefits (1)
— — — — 
Add: Market impact on IUL benefits (1)
Add: Market impact on IUL benefits (1)
31  77  0.24  0.55  
Add: Market impact on IUL benefits (1)
35 29 0.28 0.21 
Add: Mean reversion related impacts (1)
Add: Mean reversion related impacts (1)
47  (54) 0.37  (0.39) 
Add: Mean reversion related impacts (1)
30 (18)0.24 (0.13)
Add: Market impact of hedges on investments (1)
Add: Market impact of hedges on investments (1)
—  28  —  0.20  
Add: Market impact of hedges on investments (1)
— 37 — 0.27 
Less: Net realized investment gains (losses) (1)
Less: Net realized investment gains (losses) (1)
(22) 9  (0.17) 0.06  
Less: Net realized investment gains (losses) (1)
(18)(2)(0.14)(0.01)
Tax effect of adjustments (2)
Tax effect of adjustments (2)
126  (53) 0.99  (0.38) 
Tax effect of adjustments (2)
39 (56)0.31 (0.41)
Adjusted operating earningsAdjusted operating earnings$1,027  $1,085  $8.07  $7.80  Adjusted operating earnings$1,211 $1,639 $9.57 $11.92 
Weighted average common shares outstanding:Weighted average common shares outstanding:    Weighted average common shares outstanding:    
BasicBasic125.7  137.4    Basic124.8 135.8   
DilutedDiluted127.2  139.1    Diluted126.5 137.5   
(1) Pretax adjusted operating adjustments.
(2) Calculated using the statutory tax rate of 21%.
(3) Diluted shares used in this calculation represent basic shares due to the net loss. Using actual diluted shares would result in anti-dilution.
(4) Represents the difference of the per share amount for net loss using basic shares compared to the per share amount for net loss using diluted shares.
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The following table reconciles the trailing twelve months’ sum of net income to adjusted operating earnings and the five-point average of quarter-end equity to adjusted operating equity:
Twelve Months Ended June 30, Twelve Months Ended September 30,
20202019 20202019
(in millions) (in millions)
Net incomeNet income$2,503  $1,929  Net income$$
Less: Adjustments (1)
Less: Adjustments (1)
371  (229) 
Less: Adjustments (1)
58 (214)
Adjusted operating earningsAdjusted operating earnings2,132  2,158  Adjusted operating earnings1,762 2,183 
Total Ameriprise Financial, Inc. shareholders’ equityTotal Ameriprise Financial, Inc. shareholders’ equity6,190  5,742  Total Ameriprise Financial, Inc. shareholders’ equity6,197 5,815 
Less: AOCI, net of taxLess: AOCI, net of tax194  (82) Less: AOCI, net of tax243 21 
Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCITotal Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI5,996  5,824  Total Ameriprise Financial, Inc. shareholders’ equity, excluding AOCI5,954 5,794 
Less: Equity impacts attributable to CIEsLess: Equity impacts attributable to CIEs—  1  Less: Equity impacts attributable to CIEs— 1 
Adjusted operating equityAdjusted operating equity$5,996  $5,823  Adjusted operating equity$5,954 $5,793 
Return on equity, excluding AOCIReturn on equity, excluding AOCI41.7 %33.1 %Return on equity, excluding AOCI30.6 %34.0 %
Adjusted operating return on equity, excluding AOCI (2)
Adjusted operating return on equity, excluding AOCI (2)
35.6 %37.1 %
Adjusted operating return on equity, excluding AOCI (2)
29.6 %37.7 %
(1) Adjustments reflect the trailing twelve months’ sum of after-tax net realized investment gains/losses, net of DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; mean reversion related impacts; gain or loss on disposal of business that is not considered discontinued operations; the market impact on variable annuity guaranteed benefits, net of hedges and related DSIC and DAC amortization; the market impact on IUL benefits, net of hedges and the related DAC amortization, unearned revenue amortization, and the reinsurance accrual; the market impact on fixed index annuity benefits, net of hedges and the related DAC amortization; the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments; integration and restructuring charges; and net income (loss) from consolidated investment entities. After-tax is calculated using the statutory tax rate of 21%.
(2)    Adjusted operating return on equity, excluding AOCI, is calculated using the trailing twelve months of adjusted operating earnings in the numerator, and Ameriprise Financial shareholders’ equity, excluding AOCI and the impact of consolidating investment entities using a five-point average of quarter-end equity in the denominator. After-tax is calculated using the statutory tax rate of 21%.
Critical Accounting Estimates
The accounting and reporting policies that we use affect our Consolidated Financial Statements. Certain of our accounting and reporting policies are critical to an understanding of our consolidated results of operations and financial condition and, in some cases, the application of these policies can be significantly affected by the estimates, judgments and assumptions made by management during the preparation of our Consolidated Financial Statements. These accounting policies are discussed in detail in “Management’s Discussion and Analysis — Critical Accounting Estimates” in our 2019 10-K.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements and their expected impact on our future consolidated results of operations and financial condition, see Note 3 to our Consolidated Financial Statements.
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Assets Under Management and Administration
Assets under management (“AUM”) include external client assets for which we provide investment management services, such as the assets of the Columbia Threadneedle Investments funds, institutional clients and clients in our advisor platform held in wrap accounts as well as assets managed by sub-advisors selected by us. AUM also includes certain assets on our Consolidated Balance Sheets for which we provide investment management services and recognize management fees in our Asset Management segment, such as the assets of the general account and the variable product funds held in the separate accounts of our life insurance subsidiaries and CIEs. These assets do not include assets under advisement, for which we provide advisory services such as model portfolios but do not have full discretionary investment authority.
Assets under administration (“AUA”) include assets for which we provide administrative services such as client assets invested in other companies’ products that we offer outside of our wrap accounts. These assets include those held in clients’ brokerage accounts. We generally record revenues received from administered assets as distribution fees. We do not exercise management discretion over these assets and do not earn a management fee. These assets are not reported on our Consolidated Balance Sheets. AUA also includes certain assets on our Consolidated Balance Sheets for which we do not provide investment management services and do not recognize management fees, such as investments in non-affiliated funds held in the separate accounts of our life insurance subsidiaries.
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These assets do not include assets under advisement, for which we provide advisory services such as model portfolios but do not have full discretionary investment authority.
The following table presents detail regarding our AUM and AUA:
June 30,ChangeSeptember 30,Change
202020192020Change
(in billions)(in billions)
Assets Under Management and AdministrationAssets Under Management and AdministrationAssets Under Management and Administration
Advice & Wealth Management AUMAdvice & Wealth Management AUM$314.8  $289.9  $24.9  9 %Advice & Wealth Management AUM$337.0 $295.9 $41.1 14 %
Asset Management AUMAsset Management AUM476.1  468.3  7.8  2  Asset Management AUM498.0 468.6 29.4 6 
EliminationsEliminations(31.8) (29.2) (2.6) (9) Eliminations(34.1)(29.7)(4.4)(15)
Total Assets Under ManagementTotal Assets Under Management759.1  729.0  30.1  4  Total Assets Under Management800.9 734.8 66.1 9 
Total Assets Under AdministrationTotal Assets Under Administration187.7  186.9  0.8  —  Total Assets Under Administration197.7 186.5 11.2 6 
Total AUM and AUATotal AUM and AUA$946.8  $915.9  $30.9  3 %Total AUM and AUA$998.6 $921.3 $77.3 8 %
Total AUM increased $30.1$66.1 billion, or 4%9%, to $759.1$800.9 billion as of JuneSeptember 30, 2020 compared to $729.0$734.8 billion as of JuneSeptember 30, 2019 due to a $24.9$41.1 billion increase in Advice & Wealth Management AUM driven by wrap account net inflows and market appreciation and a $7.8$29.4 billion increase in Asset Management AUM driven by market appreciation and continued improvement in net inflows,flows, partially offset by retail fund distributions. See our segment results of operations discussion below for additional information on changes in our AUM.
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AMERIPRISE FINANCIAL, INC. 
Consolidated Results of Operations for the Three Months Ended JuneSeptember 30, 2020 and 2019
The following table presents our consolidated results of operations:
Three Months Ended June 30,ChangeThree Months Ended September 30,Change
202020192020Change
(in millions)(in millions)
RevenuesRevenuesRevenues
Management and financial advice feesManagement and financial advice fees$1,702  $1,732  $(30) (2)%Management and financial advice fees$1,893 $1,794 $99 6 %
Distribution feesDistribution fees375  490  (115) (23) Distribution fees400 480 (80)(17)
Net investment incomeNet investment income305  368  (63) (17) Net investment income300 356 (56)(16)
PremiumsPremiums78  376  (298) (79) Premiums80 374 (294)(79)
Other revenuesOther revenues270  316  (46) (15) Other revenues340 347 (7)(2)
Total revenuesTotal revenues2,730  3,282  (552) (17) Total revenues3,013 3,351 (338)(10)
Banking and deposit interest expenseBanking and deposit interest expense18  37  (19) (51) Banking and deposit interest expense10 34 (24)(71)
Total net revenuesTotal net revenues2,712  3,245  (533) (16) Total net revenues3,003 3,317 (314)(9)
ExpensesExpensesExpenses
Distribution expensesDistribution expenses940  948  (8) (1) Distribution expenses1,028 971 57 6 
Interest credited to fixed accountsInterest credited to fixed accounts262  186  76  41  Interest credited to fixed accounts170 127 43 34 
Benefits, claims, losses and settlement expensesBenefits, claims, losses and settlement expenses1,467  584  883  NMBenefits, claims, losses and settlement expenses1,104 594 510 86 
Amortization of deferred acquisition costsAmortization of deferred acquisition costs(248) 58  (306) NMAmortization of deferred acquisition costs85 112 (27)(24)
Interest and debt expenseInterest and debt expense41  59  (18) (31) Interest and debt expense37 52 (15)(29)
General and administrative expenseGeneral and administrative expense776  823  (47) (6) General and administrative expense763 820 (57)(7)
Total expensesTotal expenses3,238  2,658  580  22  Total expenses3,187 2,676 511 19 
Pretax income (loss)Pretax income (loss)(526) 587  (1,113) NMPretax income (loss)(184)641 (825)NM
Income tax provisionIncome tax provision13  95  (82) (86) Income tax provision(44)98 (142)NM
Net income (loss)Net income (loss)$(539) $492  $(1,031) NMNet income (loss)$(140)$543 $(683)NM
NM Not Meaningful.NM Not Meaningful.NM Not Meaningful.
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AMERIPRISE FINANCIAL, INC. 
Overall
Pretax loss was $526$184 million for the three months ended JuneSeptember 30, 2020 compared to pretax income of $587$641 million for the prior year period. The following impacts were significant drivers of the period-over-period change in pretax income:
•The unfavorable impact of unlocking and LTC loss recognition was $454 million for the three months ended September 30, 2020 compared to $16 million for the prior year period.
•The market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization) was an expense of $988$427 million for the three months ended JuneSeptember 30, 2020 compared to an expense of $60$2 million for the prior year period.
•A negative impact of $116 million in the Advice & Wealth Management segment from lower short-term interest rates.
•The market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual) was an expense of $122$4 million for the three months ended JuneSeptember 30, 2020 compared to an expensea benefit of $26$48 million for the prior year period.
•The mean reversion related impact was a benefit of $14$17 million for the three months ended June 30, 2020 compared to a benefit of $18 million for the prior year period.
•The market impact of hedges on investments was nil for the three months ended JuneSeptember 30, 2020 compared to an expense of $18$36 million for the prior year period.
•A negativefavorable impact from lowerhigher average equity markets for the three months ended JuneSeptember 30, 2020 compared to the prior year period.
The following table presents the total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the three months ended September 30:
Pretax Increase (Decrease)20202019
(in millions)
Other revenues$(1)$5 
Total revenues(1)5 
Benefits, claims, losses and settlement expenses:
LTC unlocking and loss recognition141 8 
Unlocking impact, excluding LTC212 (1)
Total benefits, claims, losses and settlement expenses353 7 
Amortization of DAC100 14 
Total expenses453 21 
Pretax income(1)
$(454)$(16)
(1) Includes a $12 million net expense and $4 million net benefit related to the market impact on variable annuity guaranteed benefits for the three months ended September 30, 2020 and 2019, respectively, which is excluded from adjusted operating earnings. Refer to Results of Operations by Segment for the impact to pretax adjusted operating earnings attributable to unlocking and LTC loss recognition.
The primary drivers of the unfavorable unlocking impact excluding LTC in the third quarter of 2020 were consistent with the prior year period and include the following items:
•Updates to our interest rate assumptions resulted in a higher expense in the third quarter of 2020 compared to the prior year period.
•A negative impact from lower short-term interest ratesLower surrenders assumptions on off-balance sheet brokerage cash balances.variable annuities with living benefit guarantees resulted in a higher expense in the third quarter of 2020 compared to the prior year period.
•A $12 million unfavorable changeChanges in equity market volatility and correlation assumptions on variable annuities resulted in a lower benefit in the mark-to-marketthird quarter of 2020 compared to the prior year period.
The primary drivers of the unfavorable LTC unlocking and loss recognition in the third quarter of 2020 were consistent to the prior year period and include the following items:
•Updates to our interest rates assumptions resulted in a higher expense in the third quarter of 2020 compared to the prior year period.
•Assumptions regarding morbidity, mortality and persistency were more in line with experience and resulted in a lower expense in the third quarter of 2020 compared to the prior year period.
•Approved and expected premium rate increases and benefit reductions resulted in a lower benefit in the third quarter of 2020 compared to the prior year period.
The total unfavorable impact on share-based compensation expense.of updates to our interest rate assumptions noted above for unlocking and LTC loss recognition was $405 million. The non-cash unfavorable impact was primarily driven by the reduction of our 10-year Treasury rate assumption from 5% to 3.5% due to recent interest rate trends and extending the grading period from three years to 6.5 years with no grading in 2020.
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AMERIPRISE FINANCIAL, INC. 
Net Revenues
Net revenues decreased $533$314 million, or 16%9%, to $2.7$3.0 billion for the three months ended JuneSeptember 30, 2020 compared to $3.2$3.3 billion for the prior year period.
Management and financial advice fees decreased $30increased $99 million, or 2%6%, to $1.7$1.9 billion for the three months ended JuneSeptember 30, 2020 compared to $1.7$1.8 billion for the prior year period reflecting lowerhigher average equity markets impacts from prior period asset management outflows and lower performance fees partially offset by higher wrap account net inflows.
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AMERIPRISE FINANCIAL, INC. 
inflows partially offset by lower performance fees.
Distribution fees decreased $115$80 million, or 23%17%, to $375$400 million for the three months ended JuneSeptember 30, 2020 compared to $490$480 million for the prior year period due to $114$90 million of lower fees on off-balance sheet brokerage cash primarily due to a decrease in short-term interest rates, variable annuity net outflows and lower transactional activity.activity partially offset by higher average equity markets.
Net investment income decreased $63$56 million, or 17%16%, to $305$300 million for the three months ended JuneSeptember 30, 2020 compared to $368$356 million for the prior year period primarily reflecting the following items:
•The unfavorable impact of lower short-term interest rates on certificates and on-balance sheet brokerage cash, and lower certificate balances due to lower average invested assets.
•Net realized investment lossesgains of $3$4 million for the three months ended JuneSeptember 30, 2020 compared to net realized investment gainslosses of nil$10 million for the prior year period. Net realized investment losses for the three months ended June 30, 2020 included a $4 million increase in the allowance for credit losses for Available-for-sale securities and financing receivables.
•The unfavorable impact of fixed annuity net outflows.
•The unfavorable impact of lower interest rates.
•The unfavorable market impact of hedges on investments of $18 million in the prior year period.
•A decrease of $15 million due to the sale of AAH.
•The favorable impact of higher invested assets related to the bank.
•Lower impairments of our investments in affordable housing partnerships.
Premiums decreased $298$294 million, or 79% to $78$80 million for the three months ended JuneSeptember 30, 2020 compared to $376$374 million for the prior year primarily reflecting the sale of AAH and lower sales of immediate annuities with a life contingent feature. Premiums in the prior year period included $276$281 million from AAH.
Other revenues decreased $46$7 million, or 15%2%, to $270$340 million for the three months ended JuneSeptember 30, 2020 compared to $316$347 million primarily due to a $58$1 million unfavorable changeimpact from unlocking for the three months ended September 30, 2020 compared to a $5 million favorable impact in unearned revenue amortization and the reinsurance accrual offset to the market impact on IUL benefits, partially offset by higher fees on variable annuity living benefit riders.prior year period.
Banking and deposit interest expense decreased $19$24 million, or 51%71%, to $18$10 million for the three months ended JuneSeptember 30, 2020 compared to $37$34 million due to lower average crediting rates on certificates and lower average certificate balances, partially offset by higher interest expense on banking deposits as deposits have grown since we launched the bank in the second quarter of 2019.balances.
Expenses
Total expenses increased $580$511 million, or 22%19%, to $3.2 billion for the three months ended JuneSeptember 30, 2020 compared to $2.7 billion for the prior year period.
Distribution expenses increased $57 million, or 6%, to $1.0 billion for the three months ended September 30, 2020 compared to $971 million for the prior year period reflecting higher average markets and higher advisor compensation due to an increase in average wrap account balances.
Interest credited to fixed accounts increased $76$43 million, or 41%34%, to $262$170 million for the three months ended JuneSeptember 30, 2020 compared to $186$127 million for the prior year period primarily reflecting the following items:
•A $188$13 million increase in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The unfavorable impact of the nonperformance credit spread was $193$18 million for the three months ended JuneSeptember 30, 2020 compared to an unfavorable impact of $5 million for the prior year period.
•A $31 million increase in expense from other market impacts on IUL benefits, net of hedges, which was a benefit of $14 million for the three months ended September 30, 2020 compared to a benefit of $45 million for the prior year period. The increase in expense was primarily due to a an increase in the IUL embedded derivative, which is reflecting higher option costs.
Benefits, claims, losses and settlement expenses increased $510 million, or 86% to $1.1 billion for the three months ended September 30, 2020 compared to $594 million for the prior year period primarily reflecting the following items:
•A $214 million increase in expense from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The unfavorable impact of the nonperformance credit spread was $103 million for the three months ended September 30, 2020 compared to a favorable impact of $111 million for the prior year period. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense. The estimated nonperformance credit spread decreased by 115 basis points in the quarter due to improvement in credit markets following market volatility related to the COVID-19 pandemic, resulting in the unfavorable impact.
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AMERIPRISE FINANCIAL, INC. 
•A $117 million decrease in expense from other market impacts on IUL benefits, net of hedges, which was a benefit of $99 million for the three months ended June 30, 2020 compared to an expense of $18 million for the prior year period. The decrease in expense was primarily due to a reduction in the IUL embedded derivative, which is reflecting lower expected future option costs.
Benefits, claims, losses and settlement expenses increased $883 million to $1.5 billion for the three months ended June 30, 2020 compared to $584 million for the prior year period primarily reflecting the following items:
•A $1.0 billion increase in expense from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The unfavorable impact of the nonperformance credit spread was $953 million for the three months ended June 30, 2020 compared to a favorable impact of $56 million for the prior year period. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense. The estimated nonperformance credit spread decreased by 115 basis points in the quarter due to improvement in credit markets following market volatility related to the COVID-19 pandemic, resulting in the unfavorable impact.
•A $161$288 million increase in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This increase was the result of an unfavorable $1.8$1.5 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits, partially offset by a favorable $1.7$1.3 billion change in the market impact on variable annuity guaranteed living benefits reserves and an unfavorable $4 million change in the DSIC offset.reserves. The main market drivers contributing to these changes are summarized below:
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AMERIPRISE FINANCIAL, INC. 
•Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higheran expense for the three months ended JuneSeptember 30, 2020 compared to an expensea benefit for the prior year period.
•Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefitlower expense for the three months ended JuneSeptember 30, 2020 compared to an expense for the prior year period.
•Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher benefit for the three months ended JuneSeptember 30, 2020 compared to an expense for the prior year period.
•Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net favorableunfavorable impact compared to the prior year period.
•The impact of unlocking excluding LTC was an expense of $212 million for the three months ended September 30, 2020 compared to a benefit of $1 million for the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities compared to the prior year period.
•Our annual review of LTC active life future policy benefit reserve adequacy in the third quarter of 2020 resulted in unlocking and loss recognition of $141 million compared to $8 million in the prior year period. The unlocking and loss recognition in the third quarter of 2020 was primarily due to a higher unfavorable impact from updates to our interest rates assumptions, a lower unfavorable impact from lesser changes to assumptions regarding morbidity, mortality and persistency and a lower benefit from approved and expected premium rate increases and benefit reductions compared to the prior year period.
•A $231$259 million decrease in auto and home expenses reflecting the sale of AAH.
•The mean reversion related impact was an expensea benefit of $5$8 million for the three months ended JuneSeptember 30, 2020 compared to a benefitan expense of $11$25 million for the prior year period.
•A $12 million decrease in reserves for immediate annuities with a life contingent feature primarily due to lower sales. This impact is offset by a decrease in premiums.
Amortization of DAC decreased $306$27 million, or 24% to a benefit of $248$85 million for the three months ended JuneSeptember 30, 2020 compared to an expense of $58$112 million for the prior year period primarily reflecting the following items:
•The DAC offset to the market impact on variable annuity guaranteed benefits was a benefit of $226$64 million for the three months ended JuneSeptember 30, 2020 compared to a benefitan expense of $4 million for the prior year period.
•The DAC offset to the market impact on IUL benefits, net of hedges was a benefit of $38 million for the three months ended June 30, 2020 compared to a benefit of $5$8 million for the prior year period.
•The mean reversion related impact was a benefit of $18$9 million for the three months ended JuneSeptember 30, 2020 compared to a benefitan expense of $7$11 million for the prior year period.
•A $14 million decrease in auto and home expenses reflecting the sale of AAH.
Interest•The impact of unlocking in the third quarter of 2020 was an expense of $100 million compared to an expense of $14 million in the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and debtlower surrenders on variable annuities with living benefit guarantees compared to the prior year period.
•The DAC offset to the market impact on IUL benefits, net of hedges was an expense decreased $18 million, or 31%, to $41of $1 million for the three months ended JuneSeptember 30, 2020 compared to $59$9 million for the prior year period.
Interest and debt expense decreased $15 million, or 29%, to $37 million for the three months ended September 30, 2020 compared to $52 million for the prior year period primarily due to a decrease in interest expense of CIEs.
General and administrative expense decreased $47$57 million, or 6%7%, to $776$763 million for the three months ended JuneSeptember 30, 2020 compared to $823$820 million for the prior year period primarily reflecting a $30$29 million decrease in auto and home expenses reflecting the sale of AAH, disciplined expense management and reengineering, partially offset by a $12 million unfavorable change in the mark-to-market impact on share-based compensation expenses.reengineering.
Income Taxes
Our effective tax rate was (2.4)%23.5% for the three months ended JuneSeptember 30, 2020 compared to 16.1%15.4% for the prior year period. The lowerhigher effective tax rate for the three months ended JuneSeptember 30, 2020 compared to the prior year period is primarily the result of the net operating loss benefit reversal and the pretax loss. See Note 16 to our Consolidated Financial Statements for additional discussion on income taxes.
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AMERIPRISE FINANCIAL, INC. 
Results of Operations by Segment for the Three Months Ended JuneSeptember 30, 2020 and 2019 
Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance. Adjusted operating earnings should not be viewed as a substitute for GAAP pretax income. We believe the presentation of segment adjusted operating earnings as we measure it for management purposes enhances the understanding of our business by reflecting the underlying performance of our core operations and facilitating a more meaningful trend analysis. See Note 19 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating earnings.
 The following table presents summary financial information by segment:
Three Months Ended June 30,Three Months Ended September 30,
2020201920202019
(in millions)(in millions)
Advice & Wealth ManagementAdvice & Wealth Management  Advice & Wealth Management  
Net revenuesNet revenues$1,537  $1,653  Net revenues$1,667 $
ExpensesExpenses1,266  1,277  Expenses1,347 1,286 
Adjusted operating earningsAdjusted operating earnings$271  $376  Adjusted operating earnings$320 $396 
Asset ManagementAsset Management  Asset Management  
Net revenuesNet revenues$668  $712  Net revenues$739 $742 
ExpensesExpenses527  548  Expenses541 569 
Adjusted operating earningsAdjusted operating earnings$141  $164  Adjusted operating earnings$198 $173 
Annuities  
Net revenues$583  $620  
Expenses428  491  
Adjusted operating earnings$155  $129  
Protection  
Retirement & Protection SolutionsRetirement & Protection Solutions  
Net revenuesNet revenues$257  $259  Net revenues$781 $788 
ExpensesExpenses187  194  Expenses870 623 
Adjusted operating earningsAdjusted operating earnings$70  $65  Adjusted operating earnings$(89)$165 
Corporate & OtherCorporate & Other  Corporate & Other  
Net revenuesNet revenues$46  $352  Net revenues$132 $450 
ExpensesExpenses106  413  Expenses334 529 
Adjusted operating lossAdjusted operating loss$(60) $(61) Adjusted operating loss$(202)$(79)
The following table presents the segment pretax adjusted operating impacts on our revenues and expenses attributable to unlocking and LTC loss recognition for the three months ended September 30:
Segment Pretax Operating Increase (Decrease)20202019
Retirement & Protection SolutionsCorporateRetirement & Protection SolutionsCorporate
(in millions)
Other revenues$2 $(3)$5 $— 
Total revenues2 (3)5 — 
Benefits, claims, losses and settlement expenses
LTC unlocking and loss recognition— 141 — 8 
Unlocking impact, excluding LTC189 7 6 (2)
Total benefits, claims, losses and settlement expenses189 148 6 6 
Amortization of DAC108 (4)15 (2)
Total expenses297 144 21 4 
Pretax income$(295)$(147)$(16)$(4)
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AMERIPRISE FINANCIAL, INC. 
Advice & Wealth Management
The following table presents the changes in wrap account assets and average balances for the three months ended JuneSeptember 30:
2020201920202019
(in billions)(in billions)
Beginning balanceBeginning balance$275.5  $278.8  Beginning balance$317.6 $
Net flowsNet flows4.9  4.8  Net flows5.2 4.1 
Market appreciation (depreciation) and otherMarket appreciation (depreciation) and other37.2  8.4  Market appreciation (depreciation) and other17.2 2.0 
Ending balanceEnding balance$317.6  $292.0  Ending balance$340.0 $298.1 
Advisory wrap account assets ending balance (1)
Advisory wrap account assets ending balance (1)
$313.9  $289.1  
Advisory wrap account assets ending balance (1)
$336.0 $295.0 
Average advisory wrap account assets (2)
Average advisory wrap account assets (2)
$290.9  $281.3  
Average advisory wrap account assets (2)
$327.4 $291.9 
(1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.
(2)Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the three months ended JuneSeptember 30, 2020. The calculation of the prior year period average used an average of the prior period’s ending balance and all the months in the current period.
Wrap account assets increased $42.1$22.4 billion, or 15%7%, during the three months ended JuneSeptember 30, 2020 due to market appreciation of $37.2$17.2 billion and net inflows of $4.9$5.2 billion. Average advisory wrap account assets increased $9.6$35.5 billion, or 3%12%, compared to the prior year period primarily reflecting market appreciation and net inflows.
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The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:
Three Months Ended June 30,ChangeThree Months Ended September 30,Change
202020192020Change
(in millions)(in millions)
RevenuesRevenuesRevenues
Management and financial advice feesManagement and financial advice fees$969  $954  $15  2 %Management and financial advice fees$1,077 $984 $93 9 %
Distribution feesDistribution fees453  580  (127) (22) Distribution fees479 578 (99)(17)
Net investment incomeNet investment income77  101  (24) (24) Net investment income70 110 (40)(36)
Other revenuesOther revenues56  54  2  4  Other revenues51 45 6 13 
Total revenuesTotal revenues1,555  1,689  (134) (8) Total revenues1,677 1,717 (40)(2)
Banking and deposit interest expenseBanking and deposit interest expense18  36  (18) (50) Banking and deposit interest expense10 35 (25)(71)
Total net revenuesTotal net revenues1,537  1,653  (116) (7) Total net revenues1,667 1,682 (15)(1)
ExpensesExpensesExpenses
Distribution expensesDistribution expenses913  926  (13) (1) Distribution expenses998 948 50 5 
Interest and debt expenseInterest and debt expense3  3  —  —  Interest and debt expense3 2 1 50 
General and administrative expenseGeneral and administrative expense350  348  2  1  General and administrative expense346 336 10 3 
Total expensesTotal expenses1,266  1,277  (11) (1) Total expenses1,347 1,286 61 5 
Adjusted operating earningsAdjusted operating earnings$271  $376  $(105) (28)%Adjusted operating earnings$320 $396 $(76)(19)%
Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $105$76 million, or 28%19%, to $271$320 million for the three months ended JuneSeptember 30, 2020 compared to $376$396 million for the prior year period due to lower earnings on brokerage cash as a result of low interest rates, partially offset by higher average wrap account balances. Pretax adjusted operating margin was 17.6%19.2% for the three months ended JuneSeptember 30, 2020 compared to 22.7%23.5% for the prior year period.
We launched Ameriprise Bank, FSB in the second quarter of 2019. In the third quarter of 2019, we purchased the existing Ameriprise portfolio of credit card accounts from a third-party bank. Cash sweep balances for Ameriprise Bank, FSB were a total of $5.3$6.3 billion as of JuneSeptember 30, 2020 compared to a total of $2.2$2.5 billion as of JuneSeptember 30, 2019, which contributed earnings of $10$8 million for the three months ended JuneSeptember 30, 2020.2020 compared to $2 million for the prior year period.
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Net Revenues
Net revenues exclude net realized investment gains or losses. Net revenues decreased $116$15 million, or 7%1%, to $1.5 billion for the three months ended JuneSeptember 30, 2020 compared to $1.7 billion for the prior year period. Adjusted operating net revenue per advisor decreased to $155,000was $168,000 for the three months ended JuneSeptember 30, 2020 down 7%, from $166,000compared to $169,000 for the prior year period.
Management and financial advice fees increased $15$93 million, or 2%9%, to $969 million$1.1 billion for the three months ended JuneSeptember 30, 2020 compared to $954$984 million for the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased $9.6$35.5 billion, or 3%12%, compared to the prior year period primarily reflecting net inflows.inflows and market appreciation.
Distribution fees decreased $127$99 million, or 22%17%, to $453$479 million for the three months ended JuneSeptember 30, 2020 compared to $580$578 million for the prior year period reflecting $114$90 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates and decreased transactional activity.lower sales of variable annuities, partially offset by higher average equity markets.
Net investment income, which excludes net realized investment gains or losses, decreased $24$40 million, or 24%36%, to $77$70 million for the three months ended JuneSeptember 30, 2020 compared to $101$110 million for the prior year period primarily due to lower certificate balances and the unfavorable impact of lower average investment yields,short-term interest rates on certificates and on-balance sheet brokerage cash, partially offset by higher average invested assets due to increased bank deposits.
Banking and deposit interest expense decreased $18$25 million, or 50%71%, to $18$10 million for the three months ended JuneSeptember 30, 2020 compared to $36$35 million for the prior year period primarily due to lower average crediting rates on certificates and lower average certificate balances, partially offset by higher interest expense on banking deposits as deposits have grown since we launched the bank in the second quarter of 2019.balances.
Expenses
Total expenses decreased $11increased $61 million, or 1%5%, for the three months ended JuneSeptember 30, 2020 compared to the prior year period.
Distribution expenses decreased $13increased $50 million, or 1%5%, to $913$998 million for the three months ended JuneSeptember 30, 2020 compared to $926$948 million for the prior year period reflecting lowerhigher asset-based advisor compensation due to lower equity marketsfrom higher wrap account assets and decreased transactional activity, partially offset byincreased investments in recruiting experienced advisors.
General and administrative expense increased $10 million, or 3%, to $346 million for the three months ended September 30, 2020 compared to $336 million for the prior year period primarily due to planned investments for future growth, partially offset by expense reengineering.
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AMERIPRISE FINANCIAL, INC. 
Asset Management
The following tables present the mutual fund performance of our retail Columbia Threadneedle Investments funds as of June 30:
Columbia
Mutual Fund Rankings in top 2 Lipper Quartiles20202019
Domestic EquityEqual weighted1 year65 %49 %
3 year56 %47 %
5 year58 %56 %
Asset weighted1 year82 %66 %
3 year71 %57 %
5 year75 %77 %
International EquityEqual weighted1 year68 %55 %
  3 year70 %80 %
  5 year65 %55 %
 Asset weighted1 year70 %68 %
  3 year82 %88 %
  5 year62 %58 %
Taxable Fixed IncomeEqual weighted1 year41 %82 %
  3 year69 %81 %
  5 year87 %88 %
 Asset weighted1 year30 %67 %
  3 year58 %82 %
  5 year90 %90 %
Tax Exempt Fixed IncomeEqual weighted1 year58 %89 %
  3 year74 %95 %
  5 year79 %94 %
 Asset weighted1 year47 %98 %
  3 year59 %98 %
  5 year62 %98 %
Asset Allocation FundsEqual weighted1 year79 %54 %
  3 year79 %55 %
  5 year83 %100 %
 Asset weighted1 year91 %70 %
  3 year94 %49 %
  5 year95 %100 %
Number of funds with 4 or 5 Morningstar star ratings Overall55  53  
  3 year43  51  
  5 year49  49  
Percent of funds with 4 or 5 Morningstar star ratings Overall53 %51 %
  3 year42 %50 %
  5 year48 %49 %
Percent of assets with 4 or 5 Morningstar star ratings Overall62 %57 %
  3 year46 %46 %
  5 year51 %56 %
Mutual fund performance rankings are based on the performance of the Institutional Class for Columbia branded mutual funds. Only funds with Institutional Class shares are included.
Equal Weighted Rankings in Top 2 Quartiles: Counts the number of funds with above median ranking divided by the total number of funds. Asset size is not a factor.
Asset Weighted Rankings in Top 2 Quartiles: Sums the total assets of the funds with above median ranking divided by total assets of all funds. Funds with more assets will receive a greater share of the total percentage above or below median.
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Threadneedle
Retail Fund Rankings in Top 2 Morningstar Quartiles or Above Index Benchmark20202019
EquityEqual weighted1 year80 %60 %
3 year71 %57 %
5 year75 %74 %
Asset weighted1 year85 %58 %
3 year81 %57 %
5 year82 %82 %
Fixed IncomeEqual weighted1 year78 %86 %
  3 year92 %77 %
  5 year92 %77 %
 Asset weighted1 year70 %92 %
  3 year97 %89 %
  5 year96 %90 %
Allocation (Managed) FundsEqual weighted1 year78 %67 %
  3 year63 %50 %
  5 year88 %86 %
 Asset weighted1 year96 %58 %
  3 year91 %54 %
  5 year99 %96 %
The performance of each fund is measured on a consistent basis against the most appropriate benchmark – a peer group of similar funds or an index. Prior period rankings have been adjusted to reflect foreign exchange forward and spot contract transactions executed by those funds, and also to include cash items, primarily fee rebates, that were previously excluded from the gross performance calculations.
Equal weighted: Counts the number of funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total number of funds. Asset size is not a factor. 
Asset weighted: Sums the assets of the funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total sum of assets in the funds. Funds with more assets will receive a greater share of the total percentage above or below median or index. 
Aggregated Allocation (Managed) Funds include funds that invest in other funds of the Threadneedle range including those funds that invest in both equity and fixed income. 
Aggregated Threadneedle data includes funds on the Threadneedle platform sub-advised by Columbia Management as well as advisors not affiliated with Ameriprise Financial, Inc.
The following table presents global managed assets by type:
Average (1)
Change
June 30,Change
Three Months Ended
June 30,
2020201920202019
(in billions)
Equity$251.4  $252.7  $(1.3) (1)%$235.8  $250.1  $(14.3) (6)%
Fixed income183.1  172.6  10.5  6  179.0  168.1  10.9  6  
Money market5.0  5.3  (0.3) (6) 5.1  5.2  (0.1) (2) 
Alternative3.1  3.2  (0.1) (3) 3.0  3.2  (0.2) (6) 
Hybrid and other33.5  34.5  (1.0) (3) 33.4  34.1  (0.7) (2) 
Total managed assets$476.1  $468.3  $7.8  2 %$456.3  $460.7  $(4.4) (1)%
(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.
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The following table presents the changes in global managed assets:
Three Months Ended June 30,
20202019
(in billions)
Global Retail Funds
Beginning assets$239.0  $268.0  
Inflows15.9  11.5  
Outflows(14.2) (13.4) 
Net VP/VIT fund flows(0.6) (0.8) 
Net new flows1.1  (2.7) 
Reinvested dividends2.0  2.9  
Net flows3.1  0.2  
Distributions(2.3) (3.4) 
Market appreciation (depreciation) and other34.3  8.5  
Foreign currency translation (1)
—  (0.5) 
Total ending assets274.1  272.8  
Global Institutional
Beginning assets187.2  191.1  
Inflows (2)
6.4  4.8  
Outflows(6.9) (6.9) 
Net flows(0.5) (2.1) 
Market appreciation (depreciation) and other (3)
15.7  7.9  
Foreign currency translation (1)
(0.4) (1.4) 
Total ending assets202.0  195.5  
Total managed assets$476.1  $468.3  
Total net flows$2.6  $(1.9) 
Former Parent Company Related (4)
Retail net new flows$0.4  $(0.3) 
Institutional net new flows(0.7) (0.7) 
Total net new flows$(0.3) $(1.0) 
(1) Amounts represent local currency to US dollar translation for reporting purposes.
(2) Includes $281 million of net flows from our recently launched our structured variable annuity product.
(3) Includes $0.7 billion and $2.9 billion for the change in Affiliated General Account Assets, excluding net flows related to our recently launched structured variable annuity product, during the three months ended June 30, 2020 and 2019, respectively.
(4) Former parent company related assets and net new flows are included in the rollforwards above.
The United Kingdom (“UK”) withdrew from the European Union (“EU”) on January 31, 2020, pursuant to a transitionary withdrawal agreement with the EU that in substance maintains the pre-withdrawal, status quo until the end of 2020. The full impact of the British exit from the EU (commonly known as “Brexit”) and its related consequences remain uncertain, including with respect to ongoing negotiations between the UK and EU and new trade agreements with global trading partners. This uncertainty may have a negative impact on our UK and European net flows (as well as foreign currency translation if the British Pound weakens).
Total segment AUM increased $49.9 billion, or 12%, during the three months ended June 30, 2020. Net inflows were $2.6 billion in the second quarter of 2020, a $4.5 billion improvement compared to the prior year period. Global retail inflows were $3.1 billion. Global institutional net outflows were $0.5 billion and included $0.7 billion of outflows from former parent-related assets.
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AMERIPRISE FINANCIAL, INC. 
The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:
Three Months Ended June 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$570  $607  $(37) (6)%
Distribution fees96  103  (7) (7) 
Net investment income1  3  (2) (67) 
Other revenues1  —  1  —  
Total revenues668  713  (45) (6) 
Banking and deposit interest expense—  1  (1) —  
Total net revenues668  712  (44) (6) 
Expenses
Distribution expenses220  230  (10) (4) 
Amortization of deferred acquisition costs3  2  1  50  
Interest and debt expense1  7  (6) (86) 
General and administrative expense303  309  (6) (2) 
Total expenses527  548  (21) (4) 
Adjusted operating earnings$141  $164  $(23) (14)%

Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $23 million, or 14%, to $141 million for the three months ended June 30, 2020 compared to $164 million for the prior year period primarily due to the impacts from prior period outflows and a decrease in performance fees.
Net Revenues
Net revenues, which exclude net realized investment gains or losses, decreased $44 million, or 6%, to $668 million for the three months ended June 30, 2020 compared to $712 million for the prior year period.
Management and financial advice fees decreased $37 million, or 6%, to $570 million for the three months ended June 30, 2020 compared to $607 million for the prior year period primarily due to lower average equity markets, the impacts from prior period outflows and a decrease in performance fees.
Distribution fees decreased $7 million, or 7%, to $96 million for the three months ended June 30, 2020 compared to $103 million for the prior year period primarily due to lower average equity markets and the impacts from prior period outflows.
Expenses
Total expenses decreased $21 million, or 4%, to $527 million for the three months ended June 30, 2020 compared to $548 million for the prior year period.
Distribution expenses decreased $10 million, or 4%, to $220 million for the three months ended June 30, 2020 compared to $230 million for the prior year period primarily due to lower average equity markets and the impacts from prior period outflows.
General and administrative expense decreased $6 million, or 2%, to $303 million for the three months ended June 30, 2020 compared to $309 million for the prior year period primarily reflecting disciplined expense management and reengineering and lower performance fee related compensation.
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AMERIPRISE FINANCIAL, INC. 
Annuities
The following table presents the results of operations of our Annuities segment on an adjusted operating basis:
Three Months Ended June 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$190  $195  $(5) (3)%
Distribution fees84  85  (1) (1) 
Net investment income123  139  (16) (12) 
Premiums13  31  (18) (58) 
Other revenues173  170  3  2  
Total revenues583  620  (37) (6) 
Banking and deposit interest expense—  —  —  —  
Total net revenues583  620  (37) (6) 
Expenses
Distribution expenses103  105  (2) (2) 
Interest credited to fixed accounts106  112  (6) (5) 
Benefits, claims, losses and settlement expenses139  168  (29) (17) 
Amortization of deferred acquisition costs21  46  (25) (54) 
Interest and debt expense10  10  —  —  
General and administrative expense49  50  (1) (2) 
Total expenses428  491  (63) (13) 
Adjusted operating earnings$155  $129  $26  20 %
Our Annuities segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DSIC and DAC amortization), the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization) and mean reversion related impacts, increased $26 million, or 20%, to $155 million for the three months ended June 30, 2020 compared to $129 million for the prior year period reflecting volatile markets, partially offset by low interest rates.
RiverSource variable annuity account balances declined 1% to $77.5 billion as of June 30, 2020 compared to the prior year period reflecting net outflows of $2.6 billion. Variable annuity sales decreased 17% compared to the prior year period reflecting a decrease in sales of variable annuities with living benefit guarantees, partially offset by sales of structured variable annuities launched earlier in 2020. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.
RiverSource fixed deferred annuity account balances declined 4% to $8.1 billion as of June 30, 2020 compared to the prior year period as older policies continue to lapse and the discontinuance of new sales of fixed annuities and fixed index annuities due to the low interest rate environment.
Net Revenues
Management and financial advice fees decreased $5 million, or 3%, to $190 million for the three months ended June 30, 2020 compared to $195 million for the prior year period primarily due to net outflows.
Net investment income, which excludes net realized investment gains or losses, decreased $16 million, or 12%, to $123 million for the three months ended June 30, 2020 compared to $139 million for the prior year period reflecting lower average invested assets due to fixed annuity net outflows and lower asset earned rates.
Premiums decreased $18 million, or 58%, to $13 million for the three months ended June 30, 2020 compared to $31 million for the prior year period reflecting lower sales of immediate annuities with a life contingent feature.
Other revenues increased $3 million, or 2%, to $173 million for the three months ended June 30, 2020 compared to $170 million for the prior year period primarily due to higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date and higher average fee rates.
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AMERIPRISE FINANCIAL, INC. 
Expenses
Interest credited to fixed accounts decreased $6 million, or 5%, to $106 million for the three months ended June 30, 2020 compared to $112 million for the prior year period primarily due to a decline in fixed deferred annuity account balances.
Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization), mean reversion related impacts, and the DSIC offset to net realized investment gains or losses, decreased $29 million, or 17%, to $139 million for the three months ended June 30, 2020 compared to $168 million for the prior year period primarily due to lower sales of immediate annuities with a life contingent feature and lower reserve funding.
Amortization of DAC, which excludes mean reversion related impacts, the DAC offset to the market impact on variable annuity guaranteed benefits and fixed index annuity benefits and the DAC offset to net realized investment gains or losses, decreased $25 million, or 54%, to $21 million for the three months ended June 30, 2020 compared to $46 million for the prior year period primarily driven by lower DAC amortization rate which is the result of lower surrenders on variable annuities and the nonperformance spread increase in the first quarter of 2020.
Protection
The following table presents the results of operations of our Protection segment on an adjusted operating basis:
Three Months Ended June 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$10  $11  $(1) (9)%
Distribution fees22  23  (1) (4) 
Net investment income76  76  —  —  
Premiums48  51  (3) (6) 
Other revenues101  98  3  3  
Total revenues257  259  (2) (1) 
Banking and deposit interest expense—  —  —  —  
Total net revenues257  259  (2) (1) 
Expenses
Distribution expenses9  11  (2) (18) 
Interest credited to fixed accounts55  52  3  6  
Benefits, claims, losses and settlement expenses73  81  (8) (10) 
Amortization of deferred acquisition costs12  13  (1) (8) 
Interest and debt expense6  4  2  50  
General and administrative expense32  33  (1) (3) 
Total expenses187  194  (7) (4) 
Adjusted operating earnings$70  $65  $5  8 %
Our Protection segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual), and mean reversion related impacts, increased $5 million, or 8%, to $70 million for the three months ended June 30, 2020 compared to $65 million for the prior year period.
Net Revenues
Premiums decreased $3 million, or 6%, to $48 million for the three months ended June 30, 2020 compared to $51 million for the prior year period primarily reflecting a decrease in premiums for disability insurance.
Other revenues, which exclude the unearned revenue amortization and reinsurance accrual offset to net realized investment gains or losses and the market impact on IUL benefits, increased $3 million, or 3%, to $101 million for the three months ended June 30, 2020 compared to $98 million for the prior year period primarily reflecting an increase in insurance charges related to favorable persistency.
Expenses
Benefits, claims, losses and settlement expenses decreased $8 million, or 10%, to $73 million for the three months ended June 30, 2020 compared to $81 million for the prior year period primarily reflecting a decrease in claims.
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Corporate & Other
The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:
Three Months Ended June 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$—  $1  $(1) (100)%
Distribution fees—  2  (2) (100)%
Net investment income18  47  (29) (62)%
Premiums25  302  (277) (92) 
Other revenues4  2  2  100 %
Total revenues47  354  (307) (87) 
Banking and deposit interest expense1  2  (1) (50) 
Total net revenues46  352  (306) (87) 
Expenses
Distribution expenses(3) —  (3) — %
Benefits, claims, losses and settlement expenses42  287  (245) (85) 
Amortization of deferred acquisition costs—  13  (13) (100)%
Interest and debt expense11  17  (6) (35) 
General and administrative expense56  96  (40) (42) 
Total expenses106  413  (307) (74) 
Adjusted operating loss$(60) $(61) $1  2 %
Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss decreased $1 million, or 2%, to $60 million for the three months ended June 30, 2020 compared to $61 million for the prior year period.
Our Corporate & Other segment includes our closed block long term care (“LTC”) insurance, which had pretax adjusted operating earnings of $17 million for the three months ended June 30, 2020 compared to $4 million for the prior year period reflecting impacts from COVID-19, with fewer clients entering nursing homes as well as increased mortality-related terminations from clients on claim.
Auto and home pretax adjusted operating earnings were $14 million for the three months ended June 30, 2019. We sold AAH on October 1, 2019.
Net Revenues
Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased $29 million, or 62%, to $18 million for the three months ended June 30, 2020 compared to $47 million for the prior year period primarily reflecting the sale of AAH and an increase in amortization of affordable housing partnerships.
Premiums decreased $277 million, or 92%, to $25 million for the three months ended June 30, 2020 compared to $302 million for the prior year period primarily reflecting the sale of AAH.
Expenses
Benefits, claims, losses and settlement expenses decreased $245 million, or 85%, to $42 million for the three months ended June 30, 2020 compared to $287 million for the prior year period primarily reflecting the sale of AAH and the impacts from COVID-19 of lower new long term care claims with fewer clients entering nursing homes as well as increased mortality-related terminations from clients on claim.
Amortization of DAC decreased $13 million to nil for the three months ended June 30, 2020 compared to $13 million for the prior year period reflecting the sale of AAH.
General and administrative expense, which excludes integration and restructuring charges, decreased $40 million, or 42%, to $56 million for the three months ended June 30, 2020 compared to $96 million for the prior year period primarily due to the sale of AAH and lower investment expenses.
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Consolidated Results of Operations for the Six Months Ended June 30, 2020 and 2019
The following table presents our consolidated results of operations:
Six Months Ended June 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$3,472  $3,359  $113  3 %
Distribution fees839  970  (131) (14) 
Net investment income633  765  (132) (17) 
Premiums169  747  (578) (77) 
Other revenues643  594  49  8  
Total revenues5,756  6,435  (679) (11) 
Banking and deposit interest expense43  72  (29) (40) 
Total net revenues5,713  6,363  (650) (10) 
Expenses
Distribution expenses1,935  1,848  87  5  
Interest credited to fixed accounts353  390  (37) (9) 
Benefits, claims, losses and settlement expenses(280) 1,254  (1,534) NM
Amortization of deferred acquisition costs264  74  190  NM
Interest and debt expense87  112  (25) (22) 
General and administrative expense1,529  1,628  (99) (6) 
Total expenses3,888  5,306  (1,418) (27) 
Pretax income1,825  1,057  768  73  
Income tax provision328  170  158  93  
Net income$1,497  $887  $610  69 %
NM Not Meaningful
Overall
Pretax income increased $768 million, or 73%, to $1.8 billion for the six months ended June 30, 2020 compared to $1.1 billion for the prior year period.
•The market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization) was a benefit of $701 million for the six months ended June 30, 2020 compared to an expense of $202 million for the prior year period.
•The market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual) was an expense of $31 million for the six months ended June 30, 2020 compared to an expense of $77 million for the prior year period.
•The market impact of hedges on investments was nil for the six months ended June 30, 2020 compared to an expense of $28 million for the prior year period.
•A $15 million favorable change in the mark-to-market impact on share-based compensation expenses.
•A positive impact from higher average equity markets during the six months ended June 30, 2020 compared to the prior year period.
•The mean reversion related impact was an expense of $47 million for the six months ended June 30, 2020 compared to a benefit of $54 million for the prior year period.
•A $27 million unfavorable change in net realized investment gains/losses, net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual.
•A negative impact from lower short-term interest rates on off-balance sheet brokerage cash balances.
Net Revenues
Net revenues decreased $650 million, or 10%, to $5.7 billion for the six months ended June 30, 2020 compared to $6.4 billion for the prior year period.
Management and financial advice fees increased $113 million, or 3%, to $3.5 billion for the six months ended June 30, 2020 compared
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to $3.4 billion for the prior year period reflecting higher average equity markets and higher wrap account net inflows, partially offset by lower performance fees and a $19 million performance fee correction as well as the impact of prior period net outflows in asset management.
Distribution fees decreased $131 million, or 14%, to $839 million for the six months ended June 30, 2020 compared to $970 million due to $165 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates, partially offset by higher average equity markets.
Net investment income decreased $132 million, or 17%, to $633 million for the six months ended June 30, 2020 compared to $765 million for the prior year period primarily reflecting:
•Net realized investment losses of $22 million for the six months ended June 30, 2020 compared to net realized investment gains of $4 million for the prior year period. Net realized investment losses for the six months ended June 30, 2020 included a $27 million increase in allowance for credit losses for Available-for-Sale securities and financing receivables. On January 1, 2020, we adopted a new accounting standard for the measurement of credit losses on financial instruments.
•The unfavorable impact of fixed annuity net outflows and the fixed annuities reinsurance transaction.
•The unfavorable impact of lower interest rates.
•The unfavorable market impact of hedges on investments of $28 million in the prior year period.
•A decrease of $14 million in net investment income of CIEs.
•A decrease of $25 million due to the sale of AAH.
•The favorable impact of higher average invested assets related to the bank.
Premiums decreased $578 million, or 77% to $169 million for the six months ended June 30, 2020 compared to $747 million due to the sale of AAH and lower sales of immediate annuities with a life contingent feature. Premiums in the prior year period included $546 million from AAH.
Other revenues increased $49 million, or 8%, to $643 million for the six months ended June 30, 2020 compared to $594 million due to a $14 million favorable change in unearned revenue amortization and the reinsurance accrual offset to the market impact on IUL benefits, a favorable impact, a favorable impact from the fixed annuities reinsurance transaction and higher fees on variable annuity living benefit riders.
Banking and deposit interest expense decreased $29 million, or 40%, to $43 million for the six months ended June 30, 2020 compared to $72 million due to lower average crediting rates on certificates and lower average certificate balances, partially offset by higher interest expense on banking deposits as deposits have grown since we launched the bank in the second quarter of 2019.
Expenses
Total expenses decreased $1.4 billion, or 27%, to $3.9 billion for the six months ended June 30, 2020 compared to $5.3 billion for the prior year period.
Distribution expenses increased $87 million, or 5%, to $1.9 billion for the six months ended June 30, 2020 compared to $1.8 billion for the prior year period reflecting higher advisor compensation due to an increase in average wrap account balances and higher average markets.
Interest credited to fixed accounts decreased $37 million, or 9%, to $353 million for the six months ended June 30, 2020 compared to $390 million for the prior year period primarily reflecting the following items:
•A $83 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The favorable impact of the nonperformance credit spread was $41 million for the six months ended June 30, 2020 compared to an unfavorable impact of $42 million for the prior year period. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense. The estimated nonperformance credit spread widened by 30 basis points during the six months ended June 30, 2020 due to market volatility related to the COVID-19 pandemic, resulting in the favorable impact.
•A $43 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $67 million for the six months ended June 30, 2020 compared to an expense of $24 million for the prior year period. The increase in expense was primarily due to a decrease in the discount rate, excluding the nonperformance credit spread, used to value the liabilities.
Benefits, claims, losses and settlement expenses decreased $1.5 billion to benefit of $280 million for the six months ended June 30, 2020 compared to an expense of $1.3 billion for the prior year period primarily reflecting the following items:
•A $735 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The favorable impact of the nonperformance credit spread was $633 million for the six months ended June
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30, 2020 compared to an unfavorable impact of $102 million for the prior year period. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense. The estimated nonperformance credit spread widened by 30 basis points during the six months ended June 30, 2020 due to market volatility related to the COVID-19 pandemic, resulting in the favorable impact.
•A $367 million decrease in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This decrease was the result of a favorable $3.1 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits, an unfavorable $2.7 billion change in the market impact on variable annuity guaranteed living benefits reserves and a favorable $2 million change in the DSIC offset. The main market drivers contributing to these changes are summarized below:
•Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a benefit for the six months ended June 30, 2020 compared to an expense for the prior year period.
•Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a lower expense for the six months ended June 30, 2020 compared to the prior year period.
•Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher expense for the six months ended June 30, 2020 compared to the prior year period.
•Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net unfavorable impact compared to the prior year period.
•A $457 million decrease in auto and home expenses reflecting the sale of AAH.
•The mean reversion related impact was an expense of $29 million for the six months ended June 30, 2020 compared to a benefit of $27 million for the prior year period.
Amortization of DAC increased $190 million to $264 million for the six months ended June 30, 2020 compared to $74 million for the prior year period primarily reflecting the following items:
•The DAC offset to the market impact on variable annuity guaranteed benefits was an expense of $158 million for the six months ended June 30, 2020 compared to a benefit of $32 million for the prior year period.
•The DAC offset to the market impact on IUL benefits, net of hedges was a benefit of $6 million for the six months ended June 30, 2020 compared to a benefit of $14 million for the prior year period.
•The mean reversion related impact was an expense of $18 million for the six months ended June 30, 2020 compared to a benefit of $27 million for the prior year period.
•A $28 million decrease in auto and home expenses reflecting the sale of AAH.
Interest and debt expense decreased $25 million, or 22%, to $87 million for the six months ended June 30, 2020 compared to $112 million for the prior year period primarily due to a decrease in interest expense of CIEs.
General and administrative expense decreased $99 million, or 6%, to $1.5 billion for the six months ended June 30, 2020 compared to $1.6 billion for the prior year period primarily reflecting a $61 million decrease in auto and home expenses reflecting the sale of AAH, disciplined expense management and reengineering and a $15 million favorable change in the mark-to-market impact on share-based compensation expenses.
Income Taxes
Our effective tax rate was 18.0% for the six months ended June 30, 2020 compared to 16.0% for the prior year period. See Note 16 to our Consolidated Financial Statements for additional discussion on income taxes.
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Results of Operations by Segment for the Six Months Ended June 30, 2020 and 2019 
The following table presents summary financial information by segment:
Six Months Ended June 30,
20202019
(in millions)
Advice & Wealth Management
Net revenues$3,232  $3,207  
Expenses2,583  2,481  
Adjusted operating earnings$649  $726  
Asset Management
Net revenues$1,354  $1,401  
Expenses1,056  1,091  
Adjusted operating earnings$298  $310  
Annuities
Net revenues$1,172  $1,224  
Expenses922  967  
Adjusted operating earnings$250  $257  
Protection
Net revenues$514  $521  
Expenses372  382  
Adjusted operating earnings$142  $139  
Corporate & Other
Net revenues$108  $694  
Expenses218  818  
Adjusted operating loss$(110) $(124) 
Advice & Wealth Management
The following table presents the changes in wrap account assets and average balances for the six months ended June 30:
20202019
(in billions)
Beginning balance$317.5  $251.5  
Net flows11.0  9.2  
Market appreciation (depreciation) and other(10.9) 31.3  
Ending balance$317.6  $292.0  
Advisory wrap account assets ending balance (1)
$313.9  $289.1  
Average advisory wrap account assets (2)
$301.0  $272.8  
(1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.
(2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the three months ended June 30, 2020. The calculation of the prior year period average used an average of the prior period’s ending balance and all the months in the current period.
Wrap account assets were flat during the six months ended June 30, 2020 due to net inflows of $11.0 billion offset by market depreciation and other of $10.9 billion. Average advisory wrap account assets increased $28.2 billion, or 10%, compared to the prior year period primarily reflecting net inflows and market appreciation.
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The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:
Six Months Ended June 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$1,993  $1,832  $161  9 %
Distribution fees1,001  1,141  (140) (12) 
Net investment income177  200  (23) (12) 
Other revenues104  105  (1) (1) 
Total revenues3,275  3,278  (3) —  
Banking and deposit interest expense43  71  (28) (39) 
Total net revenues3,232  3,207  25  1  
Expenses
Distribution expenses1,883  1,796  87  5  
Interest and debt expense5  6  (1) (17) 
General and administrative expense695  679  16  2  
Total expenses2,583  2,481  102  4  
Adjusted operating earnings$649  $726  $(77) (11)%
Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $77 million, or 11%, to $649 million for the six months ended June 30, 2020 compared to $726 million for the prior year period due to lower earnings on brokerage cash, partially offset by higher average wrap account balances.
Net Revenues
Net revenues exclude net realized investment gains or losses. Net revenues increased $25 million, or 1%, for the six months ended June 30, 2020 compared to the prior year period.
Management and financial advice fees increased $161 million, or 9%, to $2.0 billion for the six months ended June 30, 2020 compared to $1.8 billion for the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased $28.2 billion, or 10%, compared to the prior year period primarily reflecting net inflows.
Distribution fees decreased $140 million, or 12%, to $1.0 billion for the six months ended June 30, 2020 compared to $1.1 billion for the prior year period reflecting $165 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates.
Net investment income, which excludes net realized investment gains or losses, decreased $23 million, or 12%, to $177 million for the six months ended June 30, 2020 compared to $200 million for the prior year period primarily due to lower certificate balances and lower average investment yields, partially offset by higher average invested assets due to increased bank deposits.
Banking and deposit interest expense decreased $28 million, or 39%, to $43 million for the six months ended June 30, 2020 compared to $71 million for the prior year period due to lower average crediting rates on certificates and lower average certificate balances, partially offset by higher interest expense on banking deposits as deposits have grown since we launched the bank in the second quarter of 2019.
Expenses
Total expenses increased $102 million, or 4%, to $2.6 billion for the six months ended June 30, 2020 compared to $2.5 billion for the prior year period.
Distribution expenses increased $87 million, or 5%, to $1.9 billion for the six months ended June 30, 2020 compared to $1.8 billion for the prior year period higher advisor compensation due to an increase in average wrap account balances and investments in recruiting experienced advisors.
General and administrative expense increased $16 million, or 2%, to $695 million for the six months ended June 30, 2020 compared to $679 million for the prior year period primarily due to investments in business growth, including the bank.
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Asset Management
The following table presents global managed assets by type:
Average(1)
Change
June 30,ChangeSix Months Ended June 30,
2020201920202019
(in billions)
Equity$251.4  $252.7  $(1.3) (1)%$245.7  $246.6  $(0.9) — %
Fixed income183.1  172.6  10.5  6  180.9  166.3  14.6  9  
Money market5.0  5.3  (0.3) (6) 4.9  5.1  (0.2) (4) 
Alternative3.1  3.2  (0.1) (3) 3.1  3.1  —  —  
Hybrid and other33.5  34.5  (1.0) (3) 34.5  33.8  0.7  2  
Total managed assets$476.1  $468.3  $7.8  2 %$469.1  $454.9  $14.2  3 %
The following tables present the mutual fund performance of our retail Columbia Threadneedle Investments funds as of September 30:
Columbia
Mutual Fund Rankings in top 2 Lipper Quartiles		20202019
Domestic EquityEqual weighted1 year71 %46 %
  3 year61 %47 %
  5 year57 %56 %
 Asset weighted1 year75 %63 %
  3 year72 %61 %
  5 year69 %75 %
International EquityEqual weighted1 year79 %77 %
  3 year92 %80 %
  5 year92 %60 %
 Asset weighted1 year67 %83 %
  3 year89 %87 %
  5 year89 %68 %
Taxable Fixed IncomeEqual weighted1 year71 %76 %
  3 year69 %75 %
  5 year80 %88 %
 Asset weighted1 year83 %64 %
  3 year57 %82 %
  5 year83 %90 %
Tax Exempt Fixed IncomeEqual weighted1 year53 %89 %
  3 year74 %100 %
  5 year84 %94 %
 Asset weighted1 year28 %98 %
  3 year59 %100 %
  5 year65 %98 %
Asset Allocation FundsEqual weighted1 year86 %38 %
  3 year71 %73 %
  5 year75 %89 %
 Asset weighted1 year95 %64 %
  3 year84 %94 %
  5 year93 %99 %
Number of funds with 4 or 5 Morningstar star ratings Overall5852
  3 year3948
  5 year5049
Percent of funds with 4 or 5 Morningstar star ratings Overall63 %50 %
  3 year42 %47 %
  5 year55 %49 %
Percent of assets with 4 or 5 Morningstar star ratings Overall66 %58 %
  3 year46 %49 %
  5 year51 %57 %
Mutual fund performance rankings are based on the performance of the Institutional Class for Columbia branded mutual funds. Only funds with Institutional Class shares are included.
Equal Weighted Rankings in Top 2 Quartiles: Counts the number of funds with above median ranking divided by the total number of funds. Asset size is not a factor.
Asset Weighted Rankings in Top 2 Quartiles: Sums the total assets of the funds with above median ranking divided by total assets of all funds. Funds with more assets will receive a greater share of the total percentage above or below median.
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Threadneedle
Retail Fund Rankings in Top 2 Morningstar Quartiles or Above Index Benchmark		20202019
EquityEqual weighted1 year78 %65 %
  3 year76 %64 %
  5 year73 %72 %
 Asset weighted1 year86 %79 %
  3 year85 %73 %
  5 year84 %82 %
Fixed IncomeEqual weighted1 year93 %79 %
  3 year92 %88 %
  5 year96 %81 %
 Asset weighted1 year99 %81 %
  3 year97 %93 %
  5 year97 %93 %
Allocation (Managed) FundsEqual weighted1 year78 %67 %
  3 year75 %75 %
  5 year88 %75 %
 Asset weighted1 year96 %56 %
  3 year96 %94 %
  5 year99 %94 %
The performance of each fund is measured on a consistent basis against the most appropriate benchmark – a peer group of similar funds or an index. Prior period rankings have been adjusted to reflect foreign exchange forward and spot contract transactions executed by those funds, and also to include cash items, primarily fee rebates, that were previously excluded from the gross performance calculations.
Equal weighted: Counts the number of funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total number of funds. Asset size is not a factor. 
Asset weighted: Sums the assets of the funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total sum of assets in the funds. Funds with more assets will receive a greater share of the total percentage above or below median or index. 
Aggregated Allocation (Managed) Funds include funds that invest in other funds of the Threadneedle range including those funds that invest in both equity and fixed income. 
Aggregated Threadneedle data includes funds on the Threadneedle platform sub-advised by Columbia Management as well as advisors not affiliated with Ameriprise Financial, Inc.
The following table presents global managed assets by type:
Average (1)
Change
September 30,Change
Three Months Ended
September 30,
2020201920202019
(in billions)
Equity$264.8 $250.8 $14.0 6 %$264.2 $251.0 $13.2 5 %
Fixed income188.8 176.1 12.7 7 187.2 174.4 12.8 7 
Money market5.1 4.8 0.3 6 5.1 4.9 0.2 4 
Alternative3.5 3.2 0.3 9 3.3 3.1 0.2 6 
Hybrid and other35.8 33.7 2.1 6 35.4 34.0 1.4 4 
Total managed assets$498.0 $468.6 $29.4 6 %$495.2 $467.4 $27.8 6 %
(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.
The following table presents the changes in global managed assets:Six Months Ended June 30,
20202019
(in billions)
Global Retail Funds
Beginning assets$287.5  $247.9  
Inflows33.3  23.0  
Outflows(34.2) (28.5) 
Net VP/VIT fund flows(1.4) (1.5) 
Net new flows(2.3) (7.0) 
Reinvested dividends2.4  3.4  
Net flows0.1  (3.6) 
Distributions(2.9) (4.1) 
Market appreciation (depreciation) and other(9.2) 32.7  
Foreign currency translation (1)
(1.4) (0.1) 
Total ending assets274.1  272.8  
Global Institutional
Beginning assets206.7  182.8  
Inflows (2)
15.0  10.1  
Outflows(14.9) (15.7) 
Net flows0.1  (5.6) 
Market appreciation (depreciation) and other (3)
(0.9) 18.5  
Foreign currency translation (1)
(3.9) (0.2) 
Total ending assets202.0  195.5  
Total managed assets$476.1  $468.3  
Total net flows$0.2  $(9.2) 
Former Parent Company Related (4)
Retail net new flows$0.2  $(0.6) 
Institutional net new flows(1.3) (1.5) 
Total net new flows$(1.1) $(2.1) 
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The following table presents the changes in global managed assets:
Three Months Ended September 30,
20202019
(in billions)
Global Retail Funds
Beginning assets$274.1 $272.8 
Inflows14.5 11.1 
Outflows(13.2)(12.5)
Net VP/VIT fund flows(0.7)(0.6)
Net new flows0.6 (2.0)
Reinvested dividends1.4 0.6 
Net flows2.0 (1.4)
Distributions(1.5)(0.7)
Market appreciation (depreciation) and other13.8 1.8 
Foreign currency translation (1)
1.5 (1.1)
Total ending assets289.9 271.4 
Global Institutional
Beginning assets202.0 195.5 
Inflows (2)
7.0 6.4 
Outflows(10.6)(6.3)
Net flows(3.6)0.1 
Market appreciation (depreciation) and other (3)
6.6 4.1 
Foreign currency translation (1)
3.1 (2.5)
Total ending assets208.1 197.2 
Total managed assets$498.0 $468.6 
Total net flows$(1.6)$(1.3)
Former Parent Company Related (4)
Retail net new flows$0.3 $(0.1)
Institutional net new flows(0.9)(1.2)
Total net new flows$(0.6)$(1.3)
(1) Amounts represent local currency to US dollar translation for reporting purposes.
(2) Includes $380$409 million of net flows from our recently launched structured variable annuity product.
(3) Includes $2.5$1.2 billion and $2.7$1.1 billion for the change in Affiliated General Account Assets, excluding net flows related to our recently launched structured variable annuity product, during the sixthree months ended JuneSeptember 30, 2020 and 2019, respectively.
(4) Former parent company related assets and net new flows are included in the rollforwards above.
The United Kingdom (“UK”) withdrew from the European Union (“EU”) on January 31, 2020, pursuant to a transitionary withdrawal agreement with the EU that in substance maintains the pre-withdrawal, status quo until the end of 2020. The full impact of the British exit from the EU (commonly known as “Brexit”) and its related consequences remain uncertain, including with respect to the UK reaching agreement with the EU on cross border financial services (which appears to be increasingly unlikely) as well as new trade agreements with the EU and other global trading partners. This uncertainty may have a negative impact on our UK and European net flows (as well as foreign currency translation if the British Pound weakens) and depending on the outcome of negotiations, may increase costs to provide our services.
Total segment AUM increased $21.9 billion, or 5%, during the three months ended September 30, 2020. Net outflows were $1.6 billion in the third quarter of 2020, a $0.3 billion decrease compared to the prior year period. Global retail inflows were $2.0 billion. Global institutional net outflows were $3.6 billion and included a $3.5 billion quant mandate redemption from a sovereign wealth client primarily related to an asset allocation change, a $0.9 billion net redemption from an insurance client following the sale of a business and $0.9 billion of outflows from former parent-related assets.
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AMERIPRISE FINANCIAL, INC. 
Total segment AUM decreased $18.1 billion, or 4%, during the six months ended June 30, 2020. Net flows were $0.2 billion for the six months ended June 30, 2020, a $9.4 billion improvement compared to the prior year period. Elevated redemptions in March 2020 due to the market dislocation related to the COVID-19 pandemic were offset by lower redemptions during the second quarter of 2020.
The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:
Six Months Ended June 30,ChangeThree Months Ended September 30,Change
202020192020Change
(in millions)(in millions)
RevenuesRevenuesRevenues
Management and financial advice feesManagement and financial advice fees$1,153  $1,191  $(38) (3)%Management and financial advice fees$641 $636 $5 1 %
Distribution feesDistribution fees199  201  (2) (1) Distribution fees104 102 2 2 
Net investment incomeNet investment income1  9  (8) (89) Net investment income(6)2 (8)NM
Other revenuesOther revenues1  1  —  —  Other revenues— 1 (1)(100)
Total revenuesTotal revenues1,354  1,402  (48) (3) Total revenues739 741 (2)— 
Banking and deposit interest expenseBanking and deposit interest expense—  1  (1) —  Banking and deposit interest expense— (1)1 (100)
Total net revenuesTotal net revenues1,354  1,401  (47) (3) Total net revenues739 742 (3)— 
ExpensesExpensesExpenses
Distribution expensesDistribution expenses451  453  (2) —  Distribution expenses240 236 4 2 
Amortization of deferred acquisition costsAmortization of deferred acquisition costs6  5  1  20  Amortization of deferred acquisition costs2 2 — — 
Interest and debt expenseInterest and debt expense2  13  (11) (85) Interest and debt expense2 6 (4)(67)
General and administrative expenseGeneral and administrative expense597  620  (23) (4) General and administrative expense297 325 (28)(9)
Total expensesTotal expenses1,056  1,091  (35) (3) Total expenses541 569 (28)(5)
Adjusted operating earningsAdjusted operating earnings$298  $310  $(12) (4)%Adjusted operating earnings$198 $173 $25 14 %
NM Not Meaningful.NM Not Meaningful.
Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $12increased $25 million, or 4%14%, to $298$198 million for the sixthree months ended JuneSeptember 30, 2020 compared to $310$173 million for the prior year period primarily due to the impacts from prior period outflowsmarket appreciation and a decrease in performance fees, partially offset by higher average equity markets.disciplined expense management.
Net Revenues
Net revenues, which exclude net realized investment gains or losses, decreased $47$3 million or 3%,to $739 million for the sixthree months ended JuneSeptember 30, 2020 compared to $742 million for the prior year period.
Management and financial advice fees decreased $38increased $5 million, or 3%1%, to $641 million for the sixthree months ended JuneSeptember 30, 2020 compared to $636 million for the prior year period primarily due to the impacts from prior period outflows andhigher average equity markets, partially offset by a $33 million decrease in performance fees.
Net investment income, which excludes net realized investment gains or losses, decreased $8 million or 89%, to $1a loss of $6 million for the sixthree months ended JuneSeptember 30, 2020 compared to $9income of $2 million for the prior year period primarily reflecting seed money mark-to-market gains in the prior year period.an impairment of an investment and lower interest income.
Expenses
Total expenses decreased $35$28 million, or 3%5%, to $541 million for the sixthree months ended JuneSeptember 30, 2020 compared to $569 million for the prior year period.
General and administrative expense decreased $23$28 million, or 4%9%, to $597$297 million for the sixthree months ended JuneSeptember 30, 2020 compared to $620$325 million for the prior year period primarily due to reengineering initiativesreflecting disciplined expense management and lowerreengineering. Expenses in the prior year included elevated performance fee related compensation.
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AMERIPRISE FINANCIAL, INC. 
AnnuitiesRetirement & Protection Solutions
The following table presents the results of operations of our AnnuitiesRetirement & Protection Solutions segment on an adjusted operating basis:
Six Months Ended June 30,ChangeThree Months Ended September 30,Change
202020192020Change
(in millions)(in millions)
RevenuesRevenuesRevenues
Management and financial advice feesManagement and financial advice fees$379  $383  $(4) (1)%Management and financial advice fees$213 $209 $4 2 %
Distribution feesDistribution fees167  169  (2) (1) Distribution fees111 112 (1)(1)
Net investment incomeNet investment income249  295  (46) (16) Net investment income121 128 (7)(5)
PremiumsPremiums38  65  (27) (42) Premiums61 76 (15)(20)
Other revenuesOther revenues339  312  27  9  Other revenues275 263 12 5 
Total revenuesTotal revenues1,172  1,224  (52) (4) Total revenues781 788 (7)(1)
Banking and deposit interest expenseBanking and deposit interest expense—  —  —  —  Banking and deposit interest expense— — — — 
Total net revenuesTotal net revenues1,172  1,224  (52) (4) Total net revenues781 788 (7)(1)
ExpensesExpensesExpenses
Distribution expensesDistribution expenses205  209  (4) (2) Distribution expenses110 122 (12)(10)
Interest credited to fixed accountsInterest credited to fixed accounts219  221  (2) (1) Interest credited to fixed accounts100 99 1 1 
Benefits, claims, losses and settlement expensesBenefits, claims, losses and settlement expenses312  332  (20) (6) Benefits, claims, losses and settlement expenses421 251 170 68 
Amortization of deferred acquisition costsAmortization of deferred acquisition costs67  88  (21) (24) Amortization of deferred acquisition costs157 68 89 NM
Interest and debt expenseInterest and debt expense22  21  1  5  Interest and debt expense7 8 (1)(13)
General and administrative expenseGeneral and administrative expense97  96  1  1  General and administrative expense75 75 — — 
Total expensesTotal expenses922  967  (45) (5) Total expenses870 623 247 40 
Adjusted operating earningsAdjusted operating earnings$250  $257  $(7) (3)%Adjusted operating earnings$(89)$165 $(254)NM
NM Not Meaningful.NM Not Meaningful.
Our Annuities segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DSIC and DAC amortization), the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization) and mean reversion related impacts, decreased $7 million, or 3%, to $250 million for the six months ended June 30, 2020 compared to $257 million for the prior year period.
Net Revenues
Management and financial advice fees decreased $4 million, or 1%, to $379 million for the six months ended June 30, 2020 compared to $383 million for the prior year period primarily due to net outflows, partially offset by higher average variable annuity account balances driven by higher average equity markets.
Net investment income, which excludes net realized investment gains or losses, decreased $46 million, or 16%, to $249 million for the six months ended June 30, 2020 compared to $295 million for the prior year period reflecting lower average invested assets due to fixed annuity net outflows and lower earned interest rates.
Premiums decreased $27 million, or 42%, to $38 million for the six months ended June 30, 2020 compared to $65 million for the prior year period reflecting lower sales of immediate annuities with a life contingent feature.
Other revenues increased $27 million, or 9%, to $339 million for the six months ended June 30, 2020 compared to $312 million for the prior year period primarily due to higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date and higher average fee rates.
Expenses
Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization), mean reversion related impacts, and the DSIC offset to net realized investment gains or losses, decreased $20 million, or 6%, to $312 million for the six months ended June 30, 2020 compared to $332 million for the prior year period primarily due to lower sales of immediate annuities with a life contingent feature, partially offset by higher reserve funding.
Amortization of DAC, which excludes mean reversion related impacts, the DAC offset to the market impact on variable annuity guaranteed benefits and fixed index annuity benefits and the DAC offset to net realized investment gains or losses, decreased $21 million, or 24%, to $67 million for the six months ended June 30, 2020 compared to $88 million for the prior year period
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primarily driven by lower DAC amortization rate which is the result of lower surrenders on variable annuities and a lower amortization rate in the second quarter of 2020 resulting from the nonperformance spread increase in the first quarter of 2020.
Protection
The following table presents the results of operations of ourRetirement & Protection segment on an adjusted operating basis:
Six Months Ended June 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$20  $22  $(2) (9)%
Distribution fees44  46  (2) (4) 
Net investment income152  154  (2) (1) 
Premiums97  101  (4) (4) 
Other revenues201  198  3  2  
Total revenues514  521  (7) (1) 
Banking and deposit interest expense—  —  —  —  
Total net revenues514  521  (7) (1) 
Expenses
Distribution expenses18  22  (4) (18) 
Interest credited to fixed accounts108  104  4  4  
Benefits, claims, losses and settlement expenses147  155  (8) (5) 
Amortization of deferred acquisition costs22  27  (5) (19) 
Interest and debt expense11  8  3  38  
General and administrative expense66  66  —  —  
Total expenses372  382  (10) (3) 
Adjusted operating earnings$142  $139  $3  2 %
Our ProtectionSolutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual), and mean reversion related impacts, increased $3decreased $254 million or 2%, to $142a loss of $89 million for the sixthree months ended JuneSeptember 30, 2020 compared to $139income of $165 million for the prior year period.
RiverSource variable annuity account balances increased 3% to $79.8 billion as of September 30, 2020 compared to the prior year period due to market appreciation, partially offset by net outflows of $2.4 billion. Variable annuity sales increased 2% compared to the prior year period reflecting a decrease in sales of variable annuities with living benefit guarantees that was more than offset by sales of structured variable annuities launched earlier in 2020. This trend is expected to continue and meaningfully shift the mix of business away from products with living benefit guarantees over time.
Net Revenues
Management and financial advice fees increased $4 million, or 2%, to $213 million for the three months ended September 30, 2020 compared to $209 million for the prior year period primarily due to market appreciation, partially offset by variable annuity net outflows.
Net investment income, which excludes net realized investment gains or losses, decreased $2$7 million, or 1%,5% to $152$121 million for the sixthree months ended JuneSeptember 30, 2020 compared to $154$128 million reflecting lower fixed maturity investment yields.
Premiums decreased $15 million, or 20%, to $61 million for the three months ended September 30, 2020 compared to $76 million for the prior year period reflecting lower investment yields.
Premiums decreased $4 million, or 4%, to $97 million for the six months ended June 30, 2020 compared to $101 million for the prior year period primarily due tosales of immediate annuities with a decrease in premiums for disability insurance.life contingent feature.
Other revenues, which exclude the unearned revenue amortization and reinsurance accrual offset to net realized investment gains or losses and the market impact on IUL benefits, increased $3$12 million, or 2%5%, to $201$275 million for the sixthree months ended JuneSeptember 30, 2020 compared to $198$263 million for the prior year period primarily reflecting an increase in insurance charges related to favorable persistency.persistency and higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date and higher average fee rates, partially offset by the impact of unlocking.
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Expenses
Interest credited to fixed accounts increased $4Distribution expenses decreased $12 million, or 4%,10% to $108$110 million for the sixthree months ended JuneSeptember 30, 2020 compared to $104 million for the prior year period primarily driven by higher fixed account values associated with universal life and variable universal life insurance.
Benefits, claims, losses and settlement expenses decreased $8 million, or 5%, to $147 million for the six months ended June 30, 2020 compared to $155 million for the prior year period primarily due to a decrease in life claims.
Amortization of DAC decreased $5 million to $22 million for the six months ended June 30, 2020 compared to a benefit of $27$122 million for the prior year period primarily reflecting a decrease in net outflows due to lower insurance sales and annuity product mix.
Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization) and mean reversion related impacts, increased $170 million, or 68%, to $421 million for the three months ended September 30, 2020 compared to $251 million for the prior year period primarily reflecting the impact of unlocking partially offset by lower sales of immediate annuities with a life claims.contingent feature. The unlocking impact for the third quarter of 2020 was an expense of $189 million compared to an expense of $6 million for the prior year period and primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees, partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities with living benefit guarantees compared to the prior year period.
85
Amortization of DAC, which excludes mean reversion related impacts and the DAC offset to the market impact on variable annuity guaranteed benefits, increased $89 million to $157 million for the three months ended September 30, 2020 compared to $68 million for the prior year period primarily reflecting the impact of unlocking. The impact of unlocking for the third quarter of 2020 was an expense of $108 million compared to an expense of $15 million in the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year period.

AMERIPRISE FINANCIAL, INC. 
Corporate & Other
The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:
Six Months Ended June 30,ChangeThree Months Ended September 30,Change
202020192020Change
(in millions)(in millions)
RevenuesRevenuesRevenues
Management and financial advice feesManagement and financial advice fees$—  $2  $(2) (100)%Management and financial advice fees$— $2 $(2)(100)%
Distribution feesDistribution fees—  4  (4) (100) Distribution fees— 1 (1)(100)
Net investment incomeNet investment income50  91  (41) (45) Net investment income93 118 (25)(21)
PremiumsPremiums50  598  (548) (92) Premiums26 306 (280)(92)
Other revenuesOther revenues10  3  7  NMOther revenues13 24 (11)(46)
Total revenuesTotal revenues110  698  (588) (84) Total revenues132 451 (319)(71)
Banking and deposit interest expenseBanking and deposit interest expense2  4  (2) (50) Banking and deposit interest expense— 1 (1)(100)
Total net revenuesTotal net revenues108  694  (586) (84) Total net revenues132 450 (318)(71)
ExpensesExpensesExpenses
Distribution expensesDistribution expenses(5) 2  (7) NMDistribution expenses(2)2 (4)NM
Interest credited to fixed accountsInterest credited to fixed accounts66 68 (2)(3)
Benefits, claims, losses and settlement expensesBenefits, claims, losses and settlement expenses99  569  (470) (83) Benefits, claims, losses and settlement expenses204 328 (124)(38)
Amortization of deferred acquisition costsAmortization of deferred acquisition costs—  27  (27) (100) Amortization of deferred acquisition costs(2)15 (17)NM
Interest and debt expenseInterest and debt expense23  29  (6) (21) Interest and debt expense15 18 (3)(17)
General and administrative expenseGeneral and administrative expense101  191  (90) (47) General and administrative expense53 98 (45)(46)
Total expensesTotal expenses218  818  (600) (73) Total expenses334 529 (195)(37)
Adjusted operating lossAdjusted operating loss$(110) $(124) $14  11 %Adjusted operating loss$(202)$(79)$(123)NM
NM Not Meaningful.NM Not Meaningful.NM Not Meaningful.
Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss decreased $14$123 million or 11%, to $110$202 million for the sixthree months ended JuneSeptember 30, 2020 compared to $124$79 million for the prior year period.
Our Corporate & Other segment includes our closed blocks of long term care (“LTC”) insurance and fixed annuity and fixed indexed annuity (“FA”) business.
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AMERIPRISE FINANCIAL, INC. 
LTC insurance had a pretax adjusted operating earningsloss of $19$135 million for the sixthree months ended JuneSeptember 30, 2020 compared to a pretax adjusted operating loss of $8 million for the prior year period reflecting the impact from unlocking and loss recognition. Our annual review of LTC active life future policy benefit reserve adequacy resulted in unlocking and loss recognition of $141 million in the third quarter of 2020 compared to $8 million in the prior year period. The unlocking and loss recognition in the third quarter of 2020 was primarily due a higher unfavorable impact from updates to our interest rates assumptions, a lower unfavorable impact from lesser changes to assumptions regarding morbidity, mortality and persistency and a lower benefit from approved and expected premium rate increases and benefit reductions compared to the prior year period.
FA business had a pretax adjusted operating loss of $9 million for the three months ended September 30, 2020 compared to a pretax adjusted operating earnings of $10$12 million for the prior year period reflecting the low interest rate impact on spread and the impacts from COVID-19, with fewer clients entering nursing homesunlocking. The unlocking impact for the third quarter of 2020 was an expense of $3 million compared to a benefit of $4 million for the prior year period.
RiverSource fixed deferred annuity account balances declined 4% to $8.0 billion as of September 30, 2020 compared to the prior year period as policies continue to lapse and the discontinuance of new sales of fixed deferred annuities and fixed index annuities due to the low interest rate environment as well as increased mortality-related terminations from clients on claim.our strategic decisions regarding our fixed annuity business.
Auto and home pretax adjusted operating earnings were $23loss was $10 million for the sixthree months ended JuneSeptember 30, 2019. We sold AAH on October 1, 2019.
Net Revenues
Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased $41$25 million, or 45%21%, to $50$93 million for the three months ended JuneSeptember 30, 2020 compared to $91$118 million for the prior year period primarily reflecting the sale of AAH and an increaselower average invested assets due to fixed annuity net outflows and lower asset earned rates, partially offset by lower impairments of our investments in amortization of affordable housing partnerships.
Premiums decreased $548$280 million, or 92%, to $50$26 million for the sixthree months ended JuneSeptember 30, 2020 compared to $598$306 million for the prior year period primarily reflecting the sale of AAH.
Expenses
Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, decreased $124 million, or 38%, to $204 million for the three months ended September 30, 2020 compared to $328 million for the prior year period primarily reflecting the sale of AAH, partially offset by the impact of LTC unlocking and loss recognition and the FA unlocking impact.
Amortization of DAC, which excludes the DAC offset to the market impact on fixed index annuity benefits and the DAC offset to net realized investment gains or losses, decreased $17 million to a benefit of $2 million for the three months ended September 30, 2020 compared to an expense of $15 million for the prior year period reflecting the sale of AAH.
General and administrative expense, which excludes integration and restructuring charges, decreased $45 million, or 46%, to $53 million for the three months ended September 30, 2020 compared to $98 million for the prior year period primarily due to the sale of AAH and lower project expenses.
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AMERIPRISE FINANCIAL, INC. 
Consolidated Results of Operations for the Nine Months Ended September 30, 2020 and 2019
The following table presents our consolidated results of operations:
Nine Months Ended September 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$5,365 $5,153 $212 4 %
Distribution fees1,239 1,450 (211)(15)
Net investment income933 1,121 (188)(17)
Premiums249 1,121 (872)(78)
Other revenues983 941 42 4 
Total revenues8,769 9,786 (1,017)(10)
Banking and deposit interest expense53 106 (53)(50)
Total net revenues8,716 9,680 (964)(10)
Expenses
Distribution expenses2,963 2,819 144 5 
Interest credited to fixed accounts523 517 6 1 
Benefits, claims, losses and settlement expenses824 1,848 (1,024)(55)
Amortization of deferred acquisition costs349 186 163 88 
Interest and debt expense124 164 (40)(24)
General and administrative expense2,292 2,448 (156)(6)
Total expenses7,075 7,982 (907)(11)
Pretax income1,641 1,698 (57)(3)
Income tax provision284 268 16 6 
Net income$1,357 $1,430 $(73)(5)%
NM Not Meaningful
Overall
Pretax income decreased $57 million, or 3%, to $1.6 billion for the nine months ended September 30, 2020 compared to $1.7 billion for the prior year period.
•The unfavorable impact of unlocking and LTC loss recognition was $454 million for the nine months ended September 30, 2020 compared to $16 million for the prior year period.
•A negative impact of $292 million in the Advice & Wealth Management segment from lower short-term interest rates.
•The mean reversion related impact was an expense of $30 million for the nine months ended September 30, 2020 compared to a benefit of $18 million for the prior year period.
•The market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization) was a benefit of $274 million for the nine months ended September 30, 2020 compared to an expense of $204 million for the prior year period.
•The market impact of hedges on investments was nil for the nine months ended September 30, 2020 compared to an expense of $37 million for the prior year period.
•A positive impact from higher average equity markets during the nine months ended September 30, 2020 compared to the prior year period.
See our Consolidated Results of Operations for the three months ended September 30, 2020 and 2019 for a table and discussion of total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.
Net Revenues
Net revenues decreased $964 million, or 10%, to $8.7 billion for the nine months ended September 30, 2020 compared to $9.7 billion for the prior year period.
Management and financial advice fees increased $212 million, or 4%, to $5.4 billion for the nine months ended September 30, 2020 compared to $5.2 billion for the prior year period reflecting higher average equity markets and higher wrap account net inflows, partially offset by lower performance fees.
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AMERIPRISE FINANCIAL, INC. 
Distribution fees decreased $211 million, or 15%, to $1.2 billion for the nine months ended September 30, 2020 compared to $1.5 billion due to $248 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates, partially offset by higher average equity markets.
Net investment income decreased $188 million, or 17%, to $933 million for the nine months ended September 30, 2020 compared to $1.1 billion for the prior year period primarily reflecting:
•Net realized investment losses of $18 million for the nine months ended September 30, 2020 compared to net realized investment losses of $6 million for the prior year period.
•The unfavorable impact of fixed annuity net outflows and the fixed annuities reinsurance transaction.
•The unfavorable impact of lower short-term interest rates on certificates and on-balance sheet brokerage cash, and lower certificate balances due to lower average invested assets.
•The unfavorable market impact of hedges on investments of $37 million in the prior year period.
•A decrease of $16 million in net investment income of CIEs.
•A decrease of $40 million due to the sale of AAH.
•The favorable impact of higher average invested assets related to the bank.
Premiums decreased $872 million, or 78% to $249 million for the nine months ended September 30, 2020 compared to $1.1 billion due to the sale of AAH and lower sales of immediate annuities with a life contingent feature. Premiums in the prior year period included $828 million from AAH.
Other revenues increased $42 million, or 4%, to $983 million for the nine months ended September 30, 2020 compared to $941 million due to higher fees on variable annuity riders, higher cost of insurance charges on universal life (“UL”) and VUL insurance, partially offset by the impact of unlocking.
Banking and deposit interest expense decreased $53 million, or 50%, to $53 million for the nine months ended September 30, 2020 compared to $106 million due to lower average crediting rates on certificates and lower average certificate balances.
Expenses
Total expenses decreased $907 million, or 11%, to $7.1 billion for the nine months ended September 30, 2020 compared to $8.0 billion for the prior year period.
Distribution expenses increased $144 million, or 5%, to $3.0 billion for the nine months ended September 30, 2020 compared to $2.8 billion for the prior year period reflecting higher average markets and higher advisor compensation due to an increase in average wrap account balances.
Interest credited to fixed accounts increased $6 million, or 1%, to $523 million for the nine months ended September 30, 2020 compared to $517 million for the prior year period primarily reflecting the following items:
•A $70 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on IUL benefits. The favorable impact of the nonperformance credit spread was $23 million for the nine months ended September 30, 2020 compared to an unfavorable impact of $47 million for the prior year period.
•A $74 million increase in expense from other market impacts on IUL benefits, net of hedges, which was an expense of $53 million for the nine months ended September 30, 2020 compared to a benefit of $21 million for the prior year period. The increase in expense was primarily due to an increase in the IUL embedded derivative, which is reflecting higher option costs.
Benefits, claims, losses and settlement expenses decreased $1.0 billion, or 55%, to $824 million for the nine months ended September 30, 2020 compared to an expense of $1.8 billion for the prior year period primarily reflecting the following items:
•A $521 million decrease in expense from the unhedged nonperformance credit spread risk adjustment on variable annuity guaranteed benefits. The favorable impact of the nonperformance credit spread was $530 million for the nine months ended September 30, 2020 compared to a favorable impact of $9 million for the prior year period. As the estimate of the nonperformance credit spread over the LIBOR swap curve tightens or widens, the embedded derivative liability will increase or decrease. As the embedded derivative liability on which the nonperformance credit spread is applied increases (decreases), the impact of the nonperformance credit spread is favorable (unfavorable) to expense.
•An $80 million decrease in expense from other market impacts on variable annuity guaranteed benefits, net of hedges in place to offset those risks and the related DSIC amortization. This decrease was the result of a favorable $1.5 billion change in the market impact on derivatives hedging the variable annuity guaranteed benefits, partially offset by an unfavorable $1.5 billion change in the market impact on variable annuity guaranteed living benefits reserves. The main market drivers contributing to these changes are summarized below:
•Equity market impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a lower benefit for the nine months ended September 30, 2020 compared to the prior year period.
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•Interest rate impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in an expense for the nine months ended September 30, 2020 compared to a benefit in the prior year period.
•Volatility impact on the variable annuity guaranteed living benefits liability net of the impact on the corresponding hedge assets resulted in a higher benefit for the nine months ended September 30, 2020 compared to the prior year period.
•Other unhedged items, including the difference between the assumed and actual underlying separate account investment performance, fixed income credit exposures, transaction costs and various behavioral items, were a net unfavorable impact compared to the prior year period.
•The impact of unlocking excluding LTC was an expense of $212 million for the nine months ended September 30, 2020 compared to a benefit of $1 million for the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities compared to the prior year period.
•Our annual review of LTC active life future policy benefit reserve adequacy in the third quarter of 2020 resulted in unlocking and loss recognition of $141 million compared to $8 million in the prior year period. The unlocking and loss recognition in the third quarter of 2020 was primarily due to a higher unfavorable impact from updates to our interest rates assumptions, a lower unfavorable impact from lesser changes to assumptions regarding morbidity, mortality and persistency and a lower benefit from approved and expected premium rate increases and benefit reductions compared to the prior year period.
•A $719 million decrease in auto and home expenses reflecting the sale of AAH.
•The mean reversion related impact was an expense of $21 million for the nine months ended September 30, 2020 compared to a benefit of $2 million for the prior year period.
•A $27 million decrease in reserves for immediate annuities with a life contingent feature primarily due to lower sales. This impact is offset by a decrease in premiums.
Amortization of DAC increased $163 million, or 88%, to $349 million for the nine months ended September 30, 2020 compared to $186 million for the prior year period primarily reflecting the following items:
•The impact of unlocking in the third quarter of 2020 was an expense of $100 million compared to an expense of $14 million in the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year period.
•The DAC offset to the market impact on variable annuity guaranteed benefits was an expense of $94 million for the nine months ended September 30, 2020 compared to a benefit of $24 million for the prior year period.
•The mean reversion related impact was an expense of $9 million for the nine months ended September 30, 2020 compared to a benefit of $16 million for the prior year period.
•A $43 million decrease in auto and home expenses reflecting the sale of AAH.
Interest and debt expense decreased $40 million, or 24%, to $124 million for the nine months ended September 30, 2020 compared to $164 million for the prior year period primarily due to a decrease in interest expense of CIEs.
General and administrative expense decreased $156 million, or 6%, to $2.3 billion for the nine months ended September 30, 2020 compared to $2.4 billion for the prior year period primarily reflecting a $90 million decrease in auto and home expenses reflecting the sale of AAH, lower performance fee compensation, disciplined expense management and reengineering.
Income Taxes
Our effective tax rate was 17.4% for the nine months ended September 30, 2020 compared to 15.8% for the prior year period. See Note 16 to our Consolidated Financial Statements for additional discussion on income taxes.
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Results of Operations by Segment for the Nine Months Ended September 30, 2020 and 2019 
The following table presents summary financial information by segment:
Nine Months Ended September 30,
20202019
(in millions)
Advice & Wealth Management
Net revenues$4,899 $4,889 
Expenses3,930 3,767 
Adjusted operating earnings$969 $1,122 
Asset Management
Net revenues$2,093 $2,143 
Expenses1,597 1,660 
Adjusted operating earnings$496 $483 
Retirement & Protection Solutions
Net revenues$2,295 $2,337 
Expenses1,995 1,792 
Adjusted operating earnings$300 $545 
Corporate & Other
Net revenues$412 $1,340 
Expenses721 1,527 
Adjusted operating loss$(309)$(187)
See our Results of Operations by Segment for the three months ended September 30, 2020 and 2019 for a table and discussion of total pretax impacts on our revenues and expenses attributable to unlocking and LTC loss recognition.
Advice & Wealth Management
The following table presents the changes in wrap account assets and average balances for the nine months ended September 30:
20202019
(in billions)
Beginning balance$317.5 $251.5 
Net flows16.2 13.3 
Market appreciation (depreciation) and other6.3 33.3 
Ending balance$340.0 $298.1 
Advisory wrap account assets ending balance (1)
$336.0 $295.0 
Average advisory wrap account assets (2)
$309.8 $278.8 
(1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts. Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee.
(2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the nine months ended September 30, 2020. The calculation of the prior year period average used an average of the prior period’s ending balance and all the months in the current period.
Wrap account assets increased $22.5 billion, or 7%, during the nine months ended September 30, 2020 due to net inflows of $16.2 billion and market appreciation and other of $6.3 billion. Average advisory wrap account assets increased $31.0 billion, or 11%, compared to the prior year period primarily reflecting market appreciation and net inflows.


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The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:
Nine Months Ended September 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$3,070 $2,816 $254 9 %
Distribution fees1,480 1,719 (239)(14)
Net investment income247 310 (63)(20)
Other revenues155 150 5 3 
Total revenues4,952 4,995 (43)(1)
Banking and deposit interest expense53 106 (53)(50)
Total net revenues4,899 4,889 10 — 
Expenses
Distribution expenses2,881 2,744 137 5 
Interest and debt expense8 8 — — 
General and administrative expense1,041 1,015 26 3 
Total expenses3,930 3,767 163 4 
Adjusted operating earnings$969 $1,122 $(153)(14)%
Our Advice & Wealth Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $153 million, or 14%, to $969 million for the nine months ended September 30, 2020 compared to $1.1 billion for the prior year period due to lower earnings on brokerage cash as a result of low interest rates, partially offset by higher average wrap account balances.
Net Revenues
Net revenues exclude net realized investment gains or losses. Net revenues increased $10 million for the nine months ended September 30, 2020 compared to the prior year period.
Management and financial advice fees increased $254 million, or 9%, to $3.1 billion for the nine months ended September 30, 2020 compared to $2.8 billion for the prior year period primarily due to growth in average wrap account assets. Average advisory wrap account assets increased $31.0 billion, or 11%, compared to the prior year period primarily reflecting market appreciation and net inflows.
Distribution fees decreased $239 million, or 14%, to $1.5 billion for the nine months ended September 30, 2020 compared to $1.7 billion for the prior year period reflecting $248 million of lower fees on off-balance sheet brokerage cash due to a decrease in short-term interest rates.
Net investment income, which excludes net realized investment gains or losses, decreased $63 million, or 20%, to $247 million for the nine months ended September 30, 2020 compared to $310 million for the prior year period primarily due to lower certificate balances and the unfavorable impact of lower short-term interest rates on certificates and on-balance sheet brokerage cash, partially offset by higher average invested assets due to increased bank deposits.
Banking and deposit interest expense decreased $53 million, or 50%, to $53 million for the nine months ended September 30, 2020 compared to $106 million for the prior year period primarily due to lower average crediting rates on certificates and lower average certificate balances.
Expenses
Total expenses increased $163 million, or 4%, to $3.9 billion for the nine months ended September 30, 2020 compared to $3.8 billion for the prior year period.
Distribution expenses increased $137 million, or 5%, to $2.9 billion for the nine months ended September 30, 2020 compared to $2.7 billion for the prior year period reflecting higher asset-based advisor compensation from higher wrap account assets and increased investments in recruiting experienced advisors.
General and administrative expense increased $26 million, or 3%, for the nine months ended September 30, 2020 compared to the prior year period primarily due to planned investments for future growth, partially offset by expense reengineering.
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Asset Management
The following table presents global managed assets by type:
Average(1)
Change
September 30,ChangeNine Months Ended September 30,
2020201920202019
(in billions)
Equity$264.8 $250.8 $14.0 6 %$252.5 $247.7 $4.8 2 %
Fixed income188.8 176.1 12.7 7 183.2 169.0 14.2 8 
Money market5.1 4.8 0.3 6 5.0 5.0 — — 
Alternative3.5 3.2 0.3 9 3.1 3.1 — — 
Hybrid and other35.8 33.7 2.1 6 35.0 33.7 1.3 4 
Total managed assets$498.0 $468.6 $29.4 6 %$478.8 $458.5 $20.3 4 %
(1) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period.
The following table presents the changes in global managed assets:Nine Months Ended September 30,
20202019
(in billions)
Global Retail Funds
Beginning assets$287.5 $247.9 
Inflows47.8 34.1 
Outflows(47.5)(41.0)
Net VP/VIT fund flows(2.0)(2.1)
Net new flows(1.7)(9.0)
Reinvested dividends3.9 4.1 
Net flows2.2 (4.9)
Distributions(4.5)(4.8)
Market appreciation (depreciation) and other4.6 34.5 
Foreign currency translation (1)
0.1 (1.3)
Total ending assets289.9 271.4 
Global Institutional
Beginning assets206.8 182.8 
Inflows (2)
22.0 16.6 
Outflows(25.5)(22.1)
Net flows(3.5)(5.5)
Market appreciation (depreciation) and other (3)
5.6 22.7 
Foreign currency translation (1)
(0.8)(2.8)
Total ending assets208.1 197.2 
Total managed assets$498.0 $468.6 
Total net flows$(1.3)$(10.4)
Former Parent Company Related (4)
Retail net new flows$0.5 $(0.7)
Institutional net new flows(2.1)(2.7)
Total net new flows$(1.6)$(3.4)
(1) Amounts represent local currency to US dollar translation for reporting purposes.
(2) Includes $789 million of net flows from our recently launched structured variable annuity product.
(3) Includes $3.7 billion and $3.8 billion for the change in Affiliated General Account Assets, excluding net flows related to our recently launched structured annuity product, during the nine months ended September 30, 2020 and 2019, respectively.
(4) Former parent company related assets and net new flows are included in the rollforwards above.
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Total segment AUM increased $3.7 billion, or 1%, during the nine months ended September 30, 2020. Net outflows were $1.3 billion for the nine months ended September 30, 2020, a $9.1 billion improvement compared to the prior year period.
The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:
Nine Months Ended September 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$1,794 $1,827 $(33)(2)%
Distribution fees303 303 — — 
Net investment income(5)11 (16)NM
Other revenues1 2 (1)(50)
Total revenues2,093 2,143 (50)(2)
Banking and deposit interest expense— — — — 
Total net revenues2,093 2,143 (50)(2)
Expenses
Distribution expenses691 689 2 — 
Amortization of deferred acquisition costs8 7 1 14 
Interest and debt expense4 19 (15)(79)
General and administrative expense894 945 (51)(5)
Total expenses1,597 1,660 (63)(4)
Adjusted operating earnings$496 $483 $13 3 %
NM  Not Meaningful.
Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, increased $13 million, or 3%, to $496 million for the nine months ended September 30, 2020 compared to $483 million for the prior year period primarily due to market appreciation and disciplined expense management.
Net Revenues
Net revenues, which exclude net realized investment gains or losses, decreased $50 million, or 2%, for the nine months ended September 30, 2020 compared to the prior year period.
Management and financial advice fees decreased $33 million, or 2%, for the nine months ended September 30, 2020 compared to the prior year period primarily due to a $51 million decrease in performance fees, partially offset by higher average equity markets.
Net investment income, which excludes net realized investment gains or losses, decreased $16 million, to a loss of $5 million for the nine months ended September 30, 2020 compared to income of $11 million for the prior year period primarily reflecting an impairment of an investment and lower interest income.
Expenses
Total expenses decreased $63 million, or 4%, to $1.6 billion for the nine months ended September 30, 2020 compared to $1.7 billion for the prior year period.
General and administrative expense decreased $51 million, or 5%, to $894 million for the nine months ended September 30, 2020 compared to $945 million for the prior year period primarily reflecting disciplined expense management and reengineering. Expenses in the prior year included elevated performance fee compensation.
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Retirement & Protection Solutions
The following table presents the results of operations of our Retirement & Protection Solutions segment on an adjusted operating basis:
Nine Months Ended September 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$612 $614 $(2)— %
Distribution fees322 327 (5)(2)
Net investment income380 399 (19)(5)
Premiums196 242 (46)(19)
Other revenues785 755 30 4 
Total revenues2,295 2,337 (42)(2)
Banking and deposit interest expense— — — — 
Total net revenues2,295 2,337 (42)(2)
Expenses
Distribution expenses331 350 (19)(5)
Interest credited to fixed accounts297 290 7 2 
Benefits, claims, losses and settlement expenses878 735 143 19 
Amortization of deferred acquisition costs241 173 68 39 
Interest and debt expense28 24 4 17 
General and administrative expense220 220 — — 
Total expenses1,995 1,792 203 11 
Adjusted operating earnings$300 $545 $(245)(45)%
Our Retirement & Protection Solutions segment pretax adjusted operating earnings, which excludes net realized investment gains or losses (net of the related DAC amortization, unearned revenue amortization and the reinsurance accrual), the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC and DAC amortization), the market impact on IUL benefits (net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual), and mean reversion related impacts, decreased $245 million, or 45%, to $300 million for the nine months ended September 30, 2020 compared to $545 million for the prior year period.
Net Revenues
Net investment income, which excludes net realized investment gains or losses, decreased $19 million, or 5%, to $380 million for the nine months ended September 30, 2020 compared to $399 million for the prior year period reflecting lower fixed maturity investment yields.
Premiums decreased $46 million, or 19%, to $196 million for the nine months ended September 30, 2020 compared to $242 million for the prior year period primarily due to lower sales of immediate annuities with a life contingent feature.
Other revenues, which exclude the unearned revenue amortization and reinsurance accrual offset to net realized investment gains or losses and the market impact on IUL benefits, increased $30 million, or 4%, to $785 million for the nine months ended September 30, 2020 compared to $755 million for the prior year period primarily reflecting an increase in insurance charges related to favorable persistency and higher fees from variable annuity guarantee sales in the prior year where the fees start on the first anniversary date and higher average fee rates, partially offset by the impact of unlocking.
Expenses
Distribution expenses decreased $19 million, or 5% to $331 million for the nine months ended September 30, 2020 compared to $350 million for the prior year period primarily reflecting a decrease in net outflows due to lower insurance sales and annuity product mix.
Benefits, claims, losses and settlement expenses, which exclude the market impact on variable annuity guaranteed benefits (net of hedges and the related DSIC amortization) and mean reversion related impacts, increased $143 million, or 19%, to $878 million for the nine months ended September 30, 2020 compared to $735 million for the prior year period primarily reflecting the impact of unlocking partially offset by lower sales of immediate annuities with a life contingent feature. The unlocking impact for the nine months ended September 30, 2020 was an expense of $189 million compared to an expense of $6 million for the prior year period and primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable
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annuities with living benefit guarantees, partially offset by a lower benefit from changes in equity market volatility and correlation assumptions on variable annuities with living benefit guarantees compared to the prior year period.
Amortization of DAC, which excludes mean reversion related impacts and the DAC offset to the market impact on variable annuity guaranteed benefits, increased $68 million, or 39%, to $241 million for the nine months ended September 30, 2020 compared to $173 million for the prior year period primarily reflecting the impact of unlocking, partially offset by a lower DAC amortization rate which is the result of lower surrenders on variable annuities. The impact of unlocking for the nine months ended September 30, 2020 was an expense of $108 million compared to an expense of $15 million in the prior year period. The unlocking impact for the third quarter of 2020 primarily reflected a higher unfavorable impact from updates to our interest rate assumptions and lower surrenders on variable annuities with living benefit guarantees compared to the prior year period.
Corporate & Other
The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis:
Nine Months Ended September 30,Change
20202019
(in millions)
Revenues
Management and financial advice fees$— $4 $(4)(100)%
Distribution fees— 5 (5)(100)
Net investment income285 387 (102)(26)
Premiums76 904 (828)(92)
Other revenues53 45 8 NM
Total revenues414 1,345 (931)(69)
Banking and deposit interest expense2 5 (3)(60)
Total net revenues412 1,340 (928)(69)
Expenses
Distribution expenses(5)7 (12)NM
Interest credited to fixed accounts196 202 (6)(3)
Benefits, claims, losses and settlement expenses305 900 (595)(66)
Amortization of deferred acquisition costs3 52 (49)(94)
Interest and debt expense50 60 (10)(17)
General and administrative expense172 306 (134)(44)
Total expenses721 1,527 (806)(53)
Adjusted operating loss$(309)$(187)$(122)(65)%
NM  Not Meaningful.
Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed index annuity benefits (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss increased $122 million, or 65%, to $309 million for the nine months ended September 30, 2020 compared to $187 million for the prior year period.
LTC insurance had a pretax adjusted operating loss of $116 million for the nine months ended September 30, 2020 compared to a pretax adjusted operating earnings of $2 million for the prior year period reflecting the impact from unlocking and loss recognition, partially offset by the impacts from COVID-19, with fewer clients entering nursing homes as well as increased mortality-related terminations from clients on claim.
FA business had a pretax adjusted operating loss of $6 million for the nine months ended September 30, 2020 compared to a pretax adjusted operating earnings of $28 million for the prior year period reflecting fixed annuity net outflows, the impact of low interest rates and the impacts from unlocking.
Auto and home pretax adjusted operating earnings were $13 million for the nine months ended September 30, 2019. We sold AAH on October 1, 2019.
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Net Revenues
Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased $102 million, or 26%, to $285 million for the nine months ended September 30, 2020 compared to $387 million for the prior year period primarily reflecting the sale of AAH and lower average invested assets due to fixed annuity net outflows and lower asset earned rates.
Premiums decreased $828 million, or 92%, to $76 million for the nine months ended September 30, 2020 compared to $904 million for the prior year period reflecting the sale of AAH.
Expenses
Benefits, claims, losses and settlement expenses, which excludes DSIC offset to net realized investment gains or losses, decreased $470$595 million, or 83%66%, to $99$305 million for the sixnine months ended JuneSeptember 30, 2020 compared to $569$900 million for the prior year period primarily reflecting the sale of AAH, partially offset by the impact of LTC unlocking and loss recognition and the impacts from COVID-19 of lower new long term care claims with fewer clients entering nursing homes as well as increased mortality-related terminations from clients on claim.FA unlocking impact.
Amortization of DAC, which excludes the DAC offset to the market impact on fixed index annuity benefits and the DAC offset to net realized investment gains or losses, decreased $27$49 million, or 94%, to nil$3 million for the sixnine months ended JuneSeptember 30, 2020 compared to $27$52 million for the prior year period reflecting the sale of AAH.
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AMERIPRISE FINANCIAL, INC. 
General and administrative expense, which excludes integration and restructuring charges, decreased $90$134 million, or 47%44%, to $101$172 million for the sixnine months ended JuneSeptember 30, 2020 compared to $191$306 million for the prior year period primarily due to the sale of AAH and lower investmentproject expenses.
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Market Risk
Our primary market risk exposures are interest rate, equity price, foreign currency exchange rate and credit risk. Equity price and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the spread income generated on our fixed deferred annuities, fixed insurance, brokerage client cash balances, banking deposits, face-amount certificate products and the fixed portion of our variable annuities and variable insurance contracts, the value of DAC and DSIC assets, the value of liabilities for guaranteed benefits associated with our variable annuities and the value of derivatives held to hedge these benefits.
Our earnings from fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts are based upon the spread between rates earned on assets held and the rates at which interest is credited to accounts. We primarily invest in fixed rate securities to fund the rate credited to clients. We guarantee an interest rate to the holders of these products. Investment assets and client liabilities generally differ as it relates to basis, repricing or maturity characteristics. Rates credited to clients’ accounts generally reset at shorter intervals than the yield on the underlying investments. Therefore, in an increasing interest rate environment, higher interest rates may be reflected in crediting rates to clients sooner than in rates earned on invested assets, which could result in a reduced spread between the two rates, reduced earned income and a negative impact on pretax income. However, the current low interest rate environment is resulting in interest rates below the level of some of our liability guaranteed minimum interest rates (“GMIRs”). Hence, a modest rise in interest rates would not necessarily result in changes to all the liability credited rates while projected asset purchases would capture the full increase in interest rates. This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business.
As a result of the low interest rate environment, our current reinvestment yields are generally lower than the current portfolio yield. We expect our portfolio income yields to continue to decline in future periods if interest rates remain low. The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through September 30, 2021 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $4.5$4.6 billion and 2.6%2.3%, respectively, as of JuneSeptember 30, 2020. In addition, residential mortgage backed securities, which are subject to prepayment risk as a result of the low interest rate environment, totaled $10.0$10.3 billion and had a weighted average yield of 1.9%1.7% as of JuneSeptember 30, 2020. While these amounts represent investments that could be subject to reinvestment risk, it is also possible that these investments will be used to fund liabilities or may not be prepaid and will remain invested at their current yields. In addition to the interest rate environment, the mix of benefit payments versus product sales as well as the timing and volumes associated with such mix may impact our investment yield. Furthermore, reinvestment activities and the associated investment yield may also be impacted by corporate strategies implemented at management’s discretion. The average yield for investment purchases during the sixnine months ended JuneSeptember 30, 2020 was approximately 1.8%1.7%.
The reinvestment of proceeds from maturities, calls and prepayments at rates below the current portfolio yield, which may be below the level of some liability GMIRs, will have a negative impact to future operating results. To mitigate the unfavorable impact that the low interest rate environment has on our spread income, we assess reinvestment risk in our investment portfolio and monitor this risk
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in accordance with our asset/liability management framework. In addition, we may reduce the crediting rates on our fixed products when warranted, subject to guaranteed minimums.
In addition to the fixed rate exposures noted above, RiverSource Life has the following variable annuity guarantee benefits: guaranteed minimum withdrawal benefits (“GMWB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”). Each of these benefits guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying invested assets.
The variable annuity guarantees continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the liabilities. This approach works with the premise that matched sensitivities will produce a highly effective hedging result. Our comprehensive hedging program focuses mainly on first order sensitivities of assets and liabilities: Equity Market Level (Delta), Interest Rate Level (Rho) and Volatility (Vega). Additionally, various second order sensitivities are managed. We use various options, swaptions, swaps and futures to manage risk exposures. The exposures are measured and monitored daily, and adjustments to the hedge portfolio are made as necessary.
We have a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on our statutory surplus and to cover some of the residual risks not covered by other hedging activities. We assess the residual risk under a range of scenarios in creating and executing the macro hedge program. As a means of economically hedging these risks, we may use a combination of futures, options, swaps and swaptions. Certain of the macro hedge derivatives used contain settlement provisions linked to both equity returns and interest rates; the remaining are interest rate contracts or equity contracts. The macro hedge program could result in additional earnings volatility as changes in the value of the macro hedge derivatives, which are designed to reduce statutory capital volatility, may not be closely aligned to changes in the variable annuity guarantee embedded derivatives.
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AMERIPRISE FINANCIAL, INC. 
To evaluate interest rate and equity price risk we perform sensitivity testing which measures the impact on pretax income from the sources listed below for a 12-month period following a hypothetical 100 basis point increase in interest rates or a hypothetical 10% decline in equity prices. The interest rate risk test assumes a sudden 100 basis point parallel shift in the yield curve, with rates then staying at those levels for the next 12 months. The equity price risk test assumes a sudden 10% drop in equity prices, with equity prices then staying at those levels for the next 12 months. In estimating the values of variable annuities, fixed deferred indexed annuities, stock market certificates, IUL insurance and the associated hedge assets, we assume no change in implied market volatility despite the 10% drop in equity prices.
The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of JuneSeptember 30, 2020:
Equity Price Decline 10%Equity Price Decline 10%Equity Price Exposure to Pretax IncomeEquity Price Decline 10%Equity Price Exposure to Pretax Income
Before Hedge ImpactHedge ImpactNet ImpactHedge ImpactNet Impact
(in millions) (in millions)
Asset-based management and distribution fees (1)
Asset-based management and distribution fees (1)
$(251) $4  $(247) 
Asset-based management and distribution fees (1)
$(270)$4 $(266)
DAC and DSIC amortization (2)(3)
DAC and DSIC amortization (2)(3)
(35) —  (35) 
DAC and DSIC amortization (2)(3)
(45)— (45)
Variable annuities:Variable annuities:   Variable annuities:   
GMDB and GMIB (3)
GMDB and GMIB (3)
(17) —  (17) 
GMDB and GMIB (3)
(12)— (12)
GMWB (3)
GMWB (3)
(414) 382  (32) 
GMWB (3)
(393)296 (97)
GMABGMAB(23) 24  1  GMAB(24)23 (1)
Structured variable annuitiesStructured variable annuities35  (29) 6  Structured variable annuities72 (60)12 
DAC and DSIC amortization (4)
DAC and DSIC amortization (4)
N/AN/A(6) 
DAC and DSIC amortization (4)
N/AN/A9 
Total variable annuitiesTotal variable annuities(419) 377  (48) Total variable annuities(357)259 (89)
Macro hedge program (5)
Macro hedge program (5)
—  199  199  
Macro hedge program (5)
— 295 295 
Fixed deferred indexed annuitiesFixed deferred indexed annuities5  (4) 1  Fixed deferred indexed annuities4 (4)— 
CertificatesCertificates3  (3) —  Certificates2 (2)— 
IUL insuranceIUL insurance73  (57) 16  IUL insurance72 (55)17 
TotalTotal$(624) $516  $(114) (6)Total$(594)$497 $(88)(6)
Interest Rate Increase 100 Basis PointsInterest Rate Exposure to Pretax Income
Before Hedge ImpactHedge ImpactNet Impact
 (in millions)
Asset-based management and distribution fees (1)
$(51) $—  $(51) 
Variable annuities:   
GMWB1,628  (2,013) (385) 
GMAB25  (31) (6) 
Structured variable annuities(4) 12  8  
DAC and DSIC amortization (4)
N/AN/A37  
Total variable annuities1,649  (2,032) (346) 
Macro hedge program (5)
—  (4) (4) 
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products66  —  66  
Banking deposits41  —  41  
Brokerage client cash balances218  —  218  
Fixed deferred indexed annuities(1) —  (1) 
Certificates15  —  15  
IUL insurance15  2  17  
Total$1,952  $(2,034) $(45) 
N/A  Not Applicable.
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Interest Rate Increase 100 Basis PointsInterest Rate Exposure to Pretax Income
Before Hedge ImpactHedge ImpactNet Impact
 (in millions)
Asset-based management and distribution fees (1)
$(53)$— $(53)
Variable annuities:   
GMWB1,654 (2,084)(430)
GMAB25 (32)(7)
Structured variable annuities(6)25 19 
DAC and DSIC amortization (4)
N/AN/A62 
Total variable annuities1,673 (2,091)(356)
Macro hedge program (5)
— (6)(6)
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products79 — 79 
Banking deposits45 — 45 
Brokerage client cash balances219 — 219 
Fixed deferred indexed annuities(1)— (1)
Certificates18 — 18 
IUL insurance15 2 17 
Total$1,995 $(2,095)$(38)
N/A  Not Applicable.
(1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated.
(2) Market impact on DAC and DSIC amortization resulting from lower projected profits.
(3) In estimating the impact to pretax income on DAC and DSIC amortization and additional insurance benefit reserves, our assumed equity asset growth rates reflect what management would follow in its mean reversion guidelines.
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(4) Market impact on DAC and DSIC amortization related to variable annuity riders is modeled net of hedge impact.
(5) The market impact of the macro hedge program is modeled net of any related impact to DAC and DSIC amortization.
(6) Represents the net impact to pretax income. The estimated net impact to pretax adjusted operating income is approximately $(247)$(266) million.
The above results compare to an estimated negative net impact to pretax income of $90 million related to a 10% equity price decline and an estimated positive net impact to pretax income of $37 million related to a 100 basis point increase in interest rates as of December 31, 2019. The change in interest rate exposure as of JuneSeptember 30, 2020 compared to December 31, 2019 was driven by variable annuity riders, specifically GMWB, primarily due to changes in market rates.
Net impacts shown in the above table from GMWB riders result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions and with discount rates increased to reflect a current market estimate of our risk of nonperformance specific to these liabilities. Our hedging is based on our determination of economic risk, which excludes certain items in the liability valuation including the nonperformance spread risk.
Actual results could differ materially from those illustrated above as they are based on a number of estimates and assumptions. These include assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve. Furthermore, we have not tried to anticipate changes in client preferences for different types of assets or other changes in client behavior, nor have we tried to anticipate all strategic actions management might take to increase revenues or reduce expenses in these scenarios.
The selection of a 100 basis point interest rate increase as well as a 10% equity price decline should not be construed as a prediction of future market events. Impacts of larger or smaller changes in interest rates or equity prices may not be proportional to those shown for a 100 basis point increase in interest rates or a 10% decline in equity prices.
Fair Value Measurements
We report certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives and most investments and cash equivalents. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions and is not the result of a forced liquidation or distressed sale. We include actual market prices, or observable inputs, in our fair value measurements to the extent available. Broker quotes are obtained when quotes from pricing services are not available. We validate prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price
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comparison across pricing vendors and due diligence reviews of vendors. See Note 12 to the Consolidated Financial Statements for additional information on our fair value measurements.
Fair Value of Liabilities and Nonperformance Risk
Companies are required to measure the fair value of liabilities at the price that would be received to transfer the liability to a market participant (an exit price). Since there is not a market for our obligations of our variable annuity riders, indexed annuities and IUL insurance, we consider the assumptions participants in a hypothetical market would make to reflect an exit price. As a result, we adjust the valuation of variable annuity riders, indexed annuities and IUL insurance by updating certain contractholder assumptions, adding explicit margins to provide for profit, risk and expenses, and adjusting the rates used to discount expected cash flows to reflect a current market estimate of our nonperformance risk. The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance company subsidiaries not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a spread over the LIBOR swap curve as of JuneSeptember 30, 2020. As our estimate of this spread widens or tightens, the liability will decrease or increase. If this nonperformance credit spread moves to a zero spread over the LIBOR swap curve, the reduction to future net income would be approximately $777$731 million, net of DAC, DSIC, unearned revenue amortization, the reinsurance accrual and income taxes (calculated at the statutory tax rate of 21%), based on JuneSeptember 30, 2020 credit spreads.
Liquidity and Capital Resources
Overview
We maintained substantial liquidity during the sixnine months ended JuneSeptember 30, 2020. At JuneSeptember 30, 2020 and December 31, 2019, we had $7.7$7.4 billion and $3.7 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis.
At JuneSeptember 30, 2020 and December 31, 2019, the parent company had $1.4$1.6 billion and $1.8 billion, respectively, in cash, cash equivalents, and unencumbered liquid securities. Liquid securities predominantly include U.S. government agency mortgage back securities. Additional sources of liquidity include a line of credit with an affiliate up to $867 million and an unsecured revolving committed credit facility for up to $750 million that expires in October 2022. Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of JuneSeptember 30, 2020 was $2.7 $2.8 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.
Under the terms of the committed credit facility, we can increase the availability to $1.0 billion upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At JuneSeptember 30, 2020, we had no
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outstanding borrowings under this credit facility and had $1 million of outstanding letters of credit. Our credit facility contains various administrative, reporting, legal and financial covenants. Compliance with these covenants is not currently impaired by the COVID-19 pandemic, and we remain in compliance with all such covenants at JuneSeptember 30, 2020.
On April 2, 2020, we issued $500 million of 3.0% unsecured senior notes due 2025 and incurred debt issuance costs of $4 million. The net proceeds from the sale of the notes will be used for general corporate purposes.
In addition, we have access to collateralized borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances. Our subsidiaries, RiverSource Life Insurance Company (“RiverSource Life”), and Ameriprise Bank, FSB are members of the FHLB of Des Moines, which provides access to collateralized borrowings. We had $200 million and $201 million of borrowings from the FHLB, which is collateralized with commercial mortgage backed securities and residential mortgage backed securities, as of JuneSeptember 30, 2020 and December 31, 2019, respectively. We believe cash flows from operating activities, available cash balances and our availability of revolver borrowings will be sufficient to fund our operating liquidity needs and stress requirements.
On November 3, 2020, S&P Global lowered our issuer credit and senior unsecured debt rating from A with a negative outlook to A-with a stable outlook due to gradual expansion in our non-insurance businesses driving a S&P ratings methodology change. We do not believe this rating change will have a material impact on our access to or cost of capital or otherwise materially impact our liquidity.
We continue to monitor and respond to the ongoing COVID-19 pandemic. Our risk management strategy is designed to provide proactive protection during stress events such as the current pandemic. We believe our process is working as intended, and our liquidity and capital resources have remained a source of balance sheet strength during the sixnine months ended JuneSeptember 30, 2020.
Dividends from Subsidiaries
Ameriprise Financial is primarily a parent holding company for the operations carried out by our wholly-owned subsidiaries. Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), AMPF Holding Corporation, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc. (“AEIS”), our transfer agent subsidiary, Columbia Management Investment Services Corp., our investment advisory company, Columbia Management Investment
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Advisers, LLC, and Ameriprise International Holdings GmbH, which is the parent company of Threadneedle Asset Management Holdings Sàrl. The payment of dividends by many of our subsidiaries is restricted and certain of our subsidiaries are subject to regulatory capital requirements.
Actual capital and regulatory capital requirements for our wholly owned subsidiaries subject to regulatory capital requirements were as follows:
Actual CapitalRegulatory Capital Requirements
Actual capital and regulatory capital requirements for our wholly owned subsidiaries subject to regulatory capital requirements were
as follows:Actual CapitalRegulatory Capital Requirements
June 30, 2020December 31, 2019June 30, 2020December 31, 2019September 30, 2020December 31, 2019September 30, 2020December 31, 2019
(in millions)(in millions)
$4,192  $2,924  N/A$601  
RiverSource Life (1)(2)
$3,973 $2,924 N/A$601 
RiverSource Life of NY (1)(2)
RiverSource Life of NY (1)(2)
397  235  N/A38  
RiverSource Life of NY (1)(2)
399 235 N/A38 
ACC (4)(5)
ACC (4)(5)
423  430  398  402  
ACC (4)(5)
414 430 383 402 
Threadneedle Asset Management Holdings Sàrl (6)
Threadneedle Asset Management Holdings Sàrl (6)
402  287  185  183  
Threadneedle Asset Management Holdings Sàrl (6)
419 287 192 183 
Ameriprise Bank, FSB (4) (7)
Ameriprise Bank, FSB (4) (7)
479  300  376  180  
Ameriprise Bank, FSB (4) (7)
552 300 476 180 
AFS (3)(4)
AFS (3)(4)
96  94  ##
AFS (3)(4)
19194 ##
Ameriprise Captive Insurance Company (3)
Ameriprise Captive Insurance Company (3)
44  48  12  9  
Ameriprise Captive Insurance Company (3)
45 48 11 9 
Ameriprise Trust Company (3)
Ameriprise Trust Company (3)
36  35  32  32  
Ameriprise Trust Company (3)
37 35 34 32 
AEIS (3)(4)
AEIS (3)(4)
163  133  23  22  
AEIS (3)(4)
125 133 25 22 
RiverSource Distributors, Inc. (3)(4)
RiverSource Distributors, Inc. (3)(4)
13  13  ##
RiverSource Distributors, Inc. (3)(4)
1313 ##
Columbia Management Investment Distributors, Inc. (3)(4)
Columbia Management Investment Distributors, Inc. (3)(4)
16  16  ##
Columbia Management Investment Distributors, Inc. (3)(4)
1616 ##
N/A  Not applicable.
#  Amounts are less than $1 million.
(1)Actual capital is determined on a statutory basis.
(2)Regulatory capital requirement is the company action level and is based on the statutory risk-based capital filing.
(3)Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of JuneSeptember 30, 2020 and December 31, 2019.
(4)Actual capital is determined on an adjusted GAAP basis.
(5)ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements.
(6)Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation. The regulatory capital requirements at JuneSeptember 30, 2020 represent calculations at December 31, 2019 of the rule based requirements, as specified by FCA regulations.
(7)Regulatory capital requirement is based on minimum requirements for well capitalized banks in accordance with the Office of the Comptroller of the Currency (“OCC”).
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In addition to the particular regulations restricting dividend payments and establishing subsidiary capitalization requirements, we take into account the overall health of the business, capital levels and risk management considerations in determining a strategy for payments to our parent holding company from our subsidiaries, and in deciding to use cash to make capital contributions to our subsidiaries.
During the sixnine months ended JuneSeptember 30, 2020, the parent holding company received cash dividends or a return of capital from its subsidiaries of $1.0$1.5 billion (including $500$650 million from RiverSource Life) and contributed cash to its subsidiaries of $203$284 million (including $150$210 million to Ameriprise Bank, FSB). During the sixnine months ended JuneSeptember 30, 2019, the parent holding company received cash dividends or a return of capital from its subsidiaries of $1.2$1.9 billion (including $550$850 million from RiverSource Life) and contributed $179 millioncash to its subsidiaries of $233 million (including $145$180 million to Ameriprise Bank, FSB).
In 2009, RiverSource established an agreement to protect its exposure to Genworth Life Insurance Company (“GLIC”) for its reinsured LTC. In 2016, substantial enhancements to this reinsurance protection agreement were finalized. The terms of these confidential provisions within the agreement have been shared, in the normal course of regular reviews, with our domiciliary regulator and rating agencies. GLIC is domiciled in Delaware so in the event GLIC were subjected to rehabilitation or insolvency proceedings, such proceedings would be located in (and governed by) Delaware laws. Delaware courts have a long tradition of respecting commercial and reinsurance affairs as well as contracts among sophisticated parties. Similar credit protections to what we have with GLIC have been tested and respected in Delaware and elsewhere in the United States, and as a result we believe our credit protections would be respected even in the unlikely event that GLIC becomes subject to rehabilitation or insolvency proceedings in Delaware. Accordingly, while no credit protections are perfect, we believe the correct way to think about the risks represented by our counterparty credit exposure to GLIC is not the full amount of the gross liability that GLIC reinsures, but a much smaller net exposure to GLIC (if any that might exist after taking into account our credit protections). Thus, management believes that our agreement and offsetting non LTC legacy arrangements with Genworth will enable RiverSource to recover on all net exposure in all material respects in the event of a rehabilitation or insolvency of GLIC.
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Dividends Paid to Shareholders and Share Repurchases
We paid regular quarterly dividends to our shareholders totaling $257$386 million and $261$390 million for the sixnine months ended JuneSeptember 30, 2020 and 2019, respectively. On July 29,October 28, 2020, we announced a quarterly dividend of $1.04 per common share. The dividend will be paid on August 21,November 20, 2020 to our shareholders of record at the close of business on August 10,November 9, 2020.
In February 2019, our Board of Directors authorized us to repurchase up to $2.5 billion of our common stock through March 31, 2021. In August 2020, our Board of Directors authorized an additional expenditure of up to $2.5 billion for the repurchase of shares of our common stock through September 30, 2022. As of JuneSeptember 30, 2020, we had $473 million$2.7 billion remaining under thisthese share repurchase authorization.authorizations. We intend to fund share repurchases through existing working capital, future earnings and other customary financing methods. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means. During the sixnine months ended JuneSeptember 30, 2020, we repurchased a total of 4.36.3 million shares of our common stock at an average price of $149.44$150.91 per share. We resumed our share repurchases in early May 2020 after temporarily pausing our share repurchases in mid-March 2020.
Cash Flows
Cash flows of CIEs and restricted and segregated cash and cash equivalents are reflected in our cash flows provided by (used in) operating activities, investing activities and financing activities. Cash held by CIEs is not available for general use by Ameriprise Financial, nor is Ameriprise Financial cash available for general use by its CIEs. Cash and cash equivalents segregated under federal and other regulations is held for the exclusive benefit of our brokerage customers and is not available for general use by Ameriprise Financial.
Operating Activities
Net cash provided by operating activities increased $3.6$3.1 billion to $4.7$5.6 billion for the sixnine months ended JuneSeptember 30, 2020 compared to $1.2$2.6 billion for the prior year period primarily reflecting a $716$697 million increase in cash from changes in brokerage deposits, an increase in cash collateral related to derivatives and a $151$229 million decrease in income taxes paid.
Investing Activities
Our investing activities primarily relate to our Available-for-Sale investment portfolio. Further, this activity is significantly affected by the net flows of our investment certificate, fixed annuity and universal life products reflected in financing activities.
Net cash used in investing activities decreased $733increased $685 million to $896 million$2.4 billion for the sixnine months ended JuneSeptember 30, 2020 compared to $1.6$1.7 billion for the prior year period primarily reflecting a $1.2$2.7 billion increase in cash used for purchases of Available-for-Sale securities, a $222 million decrease in net cash flows related to investments of consolidated investment entities and a $110 million decrease to cash related to written options with deferred premiums partially offset by a $1.5 billion increase in proceeds from sales of Available-for-Sale securities, a $150$461 million increase in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities a $40 million increase in net cash flows related to investments of consolidated investment entities and a $358$345 million increase todecrease in cash related topaid for the fixed annuities reinsurance arrangement partially offset by a $844 million decrease in cash used for purchases of Available-for-Sale securities and a $152 million decrease to cash related to written options with deferred premiums.
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arrangement.
Financing Activities
Net cash provided by financing activities decreased $1.4 billion$271 million to $117$793 million for the sixnine months ended JuneSeptember 30, 2020 compared to $1.5$1.1 billion for the prior year period primarily reflecting a $695 million decrease in net cash inflows from banking deposits, a $450 million increase in repayments of our senior notes, a $164$150 million decrease in net cash flows related to policyholder account balances, and a $116$197 million decrease in net cash flows from investment certificates, a $199 million decrease in net cash flows related to purchased options with deferred premiums partially offset by a $111$356 million decrease in share repurchases.repurchases and a $382 million increase in borrowings by consolidated investment entities.
Contractual Commitments
There have been no material changes to our contractual obligations disclosed in our 2019 10-K. 
Off-Balance Sheet Arrangements
We provide asset management services to investment entities which are considered to be VIEs, such as CLOs, hedge funds, property funds and other private funds, which are sponsored by us. We consolidate certain CLOs. We have determined that consolidation is not required for hedge funds, property funds and other private funds, which are sponsored by us. Our maximum exposure to loss with respect to our investment in these non-consolidated entities is limited to our carrying value. We have no obligation to provide further financial or other support to these investment entities nor have we provided any support to these investment entities. See Note 5 to our Consolidated Financial Statements for additional information on our arrangements with these investment entities.
Forward-Looking Statements
This report contains forward-looking statements that reflect management’s plans, estimates and beliefs. Actual results could differ materially from those described in these forward-looking statements. Examples of such forward-looking statements include: 
•statements of the Company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor
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productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, benefits and claims expenses, general and administrative costs, consolidated tax rate, return of capital to shareholders, debt repayment and excess capital position and financial flexibility to capture additional growth opportunities;
•statements of the Company’s position, future performance and ability to pursue business strategy relative to the spread and impact of the COVID-19 pandemic and the related market, economic, client, governmental and healthcare system response; 
•statements about the expected trend in the shift of the variable annuity sales business away from products with living benefit guarantees over time;
•other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and
•statements of assumptions underlying such statements.
The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “forecast,” “on track,” “project,” “continue,” “able to remain,” “resume,” “deliver,” “develop,” “evolve,” “drive,” “enable,” “flexibility,” “scenario,” “case” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from such statements.
Such factors include, but are not limited to:
•the impacts on our business of the spread and impact of the COVID-19 pandemic and the related economic, client, governmental and healthcare system responses;
•conditions in the interest rate, credit default, equity market and foreign exchange environments, including changes in valuations, liquidity and volatility;
•uncertainty as to the timing of launching the Company’s federal savings bank products;
•changes in and the adoption of relevant accounting standards and securities rating agency standards and processes, as well as changes in the litigation and regulatory environment, including ongoing legal proceedings and regulatory actions, the frequency and extent of legal claims threatened or initiated by clients, other persons and regulators, and developments in regulation and legislation, including the rules and regulations implemented or that may be implemented or modified in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act, bank holding company laws and regulations or in light of the U.S. Department of Labor’s fiduciary regulations (as well as state and other fiduciary rules, the SEC best interest standards, or similar standards such as the Certified Financial Planner Board standards) pertaining to the fiduciary status of investment advice providers to 401(k) plans, plan sponsors, plan participants and the holders of individual retirement or health savings accounts and related issues;
•investment management performance and distribution partner and consumer acceptance of the Company’s products;
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•effects of competition in the financial services industry, including pricing pressure, the introduction of new products and services and changes in product distribution mix and distribution channels;
•changes to the Company’s reputation that may arise from employee or advisor misconduct, legal or regulatory actions, cybersecurity incidents, perceptions of the financial services industry generally, improper management of conflicts of interest or otherwise;
•the Company’s capital structure, including indebtedness, limitations on subsidiaries to pay dividends, and the extent, manner, terms and timing of any share or debt repurchases management may effect as well as the opinions of rating agencies (such as S&P Global recently lowering our issuer credit and senior unsecured debt rating) and other analysts and the reactions of market participants or the Company’s regulators, advisors, distribution partners or customers in response to any change or prospect of change in any such opinion;
•changes to the availability and cost of liquidity and the Company’s credit capacity that may arise due to shifts in market conditions, the Company’s credit ratings and the overall availability of credit;
•risks of default, capacity constraint or repricing by issuers or guarantors of investments the Company owns or by counterparties to hedge, derivative, insurance or reinsurance arrangements or by manufacturers of products the Company distributes, experience deviations from the Company’s assumptions regarding such risks, the evaluations or the prospect of changes in evaluations of any such third parties published by rating agencies or other analysts, and the reactions of other market participants or the Company’s regulators, advisors, distribution partners or customers in response to any such evaluation or prospect of changes in evaluation;
•experience deviations from the Company’s assumptions regarding morbidity, mortality, persistency and premium rate increases in certain annuity and insurance products (including, but not limited to, variable annuities and long term care policies), or from assumptions regarding market returns assumed in valuing or unlocking DAC and DSIC or market volatility underlying the Company’s valuation and hedging of guaranteed benefit annuity riders, or from assumptions regarding interest rates or asset yield assumed in the Company's loss recognition testing of its long term care business, or from assumptions regarding anticipated claims and losses relating to the Company’s auto and home insurance products;
•changes in capital requirements that may be indicated, required or advised by regulators or rating agencies;
•the impacts of the Company’s efforts to improve distribution economics and to grow third-party distribution of its products;
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•the ability to pursue and complete strategic transactions and initiatives, including acquisitions, divestitures, restructurings, joint ventures and the development of new products and services;
•the ability to realize the financial, operating and business fundamental benefits of strategic transactions and initiatives the Company has completed, is pursuing or may pursue in the future, which may be impacted by the ability to obtain regulatory approvals, the ability to effectively manage related expenses and by market, business partner and consumer reactions to such strategic transactions and initiatives;
•the ability and timing to realize savings and other benefits from re-engineering and tax planning;
•interruptions or other failures in the Company’s communications, technology and other operating systems, including errors or failures caused by third-party service providers, interference or failures caused by third party attacks on the Company’s systems (or other cybersecurity incidents), or the failure to safeguard the privacy or confidentiality of sensitive information and data on such systems; and
•general economic and political factors, including consumer confidence in the economy and the financial industry, the ability and inclination of consumers generally to invest as well as their ability and inclination to invest in financial instruments and products other than cash and cash equivalents, the costs of products and services the Company consumes in the conduct of its business, and applicable legislation and regulation and changes therein (such as the ongoing negotiations in connection with UK’s membership in the European Union)Union and recent U.S. election), including tax laws, tax treaties, fiscal and central government treasury policy, and policies regarding the financial services industry and publicly-held firms, and regulatory rulings and pronouncements.
Management cautions the reader that the foregoing list of factors is not exhaustive. There may also be other risks that management is unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management undertakes no obligation to update publicly or revise any forward-looking statements. The foregoing list of factors should be read in conjunction with the “Risk Factors” discussion included in Part I, Item 1A of our 2019 10-K and “Item 1A. Risk Factors” in this Form 10-Q.
Ameriprise Financial announces financial and other information to investors through the Company’s investor relations website at ir.ameriprise.com, as well as SEC filings, press releases, public conference calls and webcasts. Investors and others interested in the company are encouraged to visit the investor relations website from time to time, as information is updated and new information is posted. The website also allows users to sign up for automatic notifications in the event new materials are posted. The information found on the website is not incorporated by reference into this report or in any other report or document the Company furnishes or files with the SEC.
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AMERIPRISE FINANCIAL, INC. 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk” in this report is incorporated herein by reference. These disclosures should be read in conjunction with the “Quantitative and Qualitative Disclosures About Market Risk” discussion included as Part II, Item 7A of our 2019 10-K filed with the SEC on February 26, 2020.
ITEM 4.  CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to provide reasonable assurance that the information required to be reported in the Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in and pursuant to SEC regulations, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding the required disclosure. It should be noted that, because of inherent limitations, our company’s disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable level of assurance as of JuneSeptember 30, 2020.
Changes in Internal Control over Financial Reporting
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our company’s internal control over financial reporting.
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AMERIPRISE FINANCIAL, INC. 
PART II.  OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS
The information set forth in Note 17 to the Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference.
ITEM 1A.  RISK FACTORS
We are including the following risk factor which should be read in conjunction with our risk factors provided in Part I, Item 1A of our 2019 10-K:
The COVID-19 pandemic creates significant risks and uncertainties for our business.
The ongoing coronavirus disease 2019 (‘‘COVID-19’’) pandemic creates significant and pervasive societal, economic and market disruption globally. In particular, global financial markets have seen increased volatility and significant changes to the value of investments. If the value of assets under management decreases, our revenue and operating results could be substantially impacted. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition will depend on current and future developments. These developments are highly uncertain, including the scope, duration and severity of the pandemic, the effectiveness of our remote working and our ongoing phased office reopening plans,reopenings, the measures that may be taken by various governmental authorities in response to the outbreak (such as legislative action, stimulus, quarantines and travel restrictions, effectiveness of health care, and new or interim regulation), the actions of other third parties in response to the pandemic, and the possible further impacts on the global economy. Given the uncertainty of future developments, we seek to manage our risks effectively, but our ability to do so is subject to the inherent limitations of obtaining timely, reliable analysis and information in a situation that continues to develop. No assurance can be given that the steps we have taken will continue to be effective or appropriate.
Starting in the end of the first quarter of 2020, the COVID-19 pandemic impacted (and will likely continue to impact) each of our business segments. Consumer demand, client investing decisions in light of ongoing economic uncertainty, our fee and investment income, our owned asset values, and our credit reserve and other financial or actuarial assumptions and reserve calculations have been (and may further be) negatively impacted from a decline and volatility of asset prices, sustained reduction in interest rates, nonperformance credit spreads, credit deterioration, decreased liquidity in trading markets and other economic and market effects of the global pandemic. We are actively monitoring the potential direct and indirect impacts that the COVID-19 pandemic may have on our segments. The most significant impacts of the COVID-19 pandemic on the operational and financial results of our core business segments included:include:
•In our Advice and Wealth Management segment, the significant reduction inand ongoing impact of reduced interest rates, lowerand the fee income impact from volatile equity markets and transactional client activity from consumer demand anddriven by client investing decisions in light of ongoing economic uncertainty, and lower average equity markets;uncertainty;
•In our Asset Management segment, lowervolatile average equity markets and changes in consumer demand and client investing decisions in light of ongoing economic uncertainty; and
•In our Annuities andRetirement & Protection segments,Solutions segment, the significant reduction in interest rates and the impact of volatile equity market levels on spread and fee income and the associated deferred acquisition cost amortization as well as changes in consumer demand and the operating environment that altered our mix of sales and product offerings.
ShouldIf these conditions be prolongedcontinue or worsen, for an extended time period, we could experience volatility and uncertainty in volumes, uncertainty in availability and price levels of financial assets and hedges, reduced client activity and fees, increased mortality and morbidity in our insurance policyholder base, increased constraints and costs of capital, possible impacts to our credit ratings and other negative impacts on our financial position.
The COVID 19 pandemic may also affect the ability of our suppliers, distributors, vendors, reinsurers and other counterparties to provide products and services and otherwise fulfill their commitments to us. In addition, the market and economic uncertainty and the effects of the COVID-19 pandemic will heighten the other risks described in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K.
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AMERIPRISE FINANCIAL, INC. 
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents the information with respect to purchases made by or on behalf of Ameriprise Financial, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the secondthird quarter of 2020:
PeriodPeriod(a)(b)(c)(d)Period(a)(b)(c)(d)
Total Number
of Shares Purchased
Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
Average Price
Paid Per Share
Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 1 to April 30, 2020
July 1 to July 31, 2020July 1 to July 31, 2020
Share repurchase program (1)
Share repurchase program (1)
—  $—  —  $723,598,509  
Share repurchase program (1)
433,550 $151.84 433,550 $406,770,075 
Employee transactions (2)
Employee transactions (2)
3,148  $113.86  N/AN/A
Employee transactions (2)
45,499 $147.34 N/AN/A
May 1 to May 31, 2020
August 1 to August 31, 2020August 1 to August 31, 2020
Share repurchase program (1)
Share repurchase program (1)
647,687  $131.25  647,687  $638,588,231  
Share repurchase program (1)
621,055 $157.76 621,055 $2,808,791,115 
Employee transactions (2)
Employee transactions (2)
14,543  $128.27  N/AN/A
Employee transactions (2)
81,779 $159.73 N/AN/A
June 1 to June 30, 2020
September 1 to September 30, 2020September 1 to September 30, 2020
Share repurchase program (1)
Share repurchase program (1)
1,104,491  $150.29  1,104,491  $472,598,319  
Share repurchase program (1)
1,013,362 $152.48 1,013,362 $2,654,274,924 
Employee transactions (2)
Employee transactions (2)
23,066  $151.99  N/AN/A
Employee transactions (2)
17,936 $155.14 N/AN/A
TotalsTotalsTotals
Share repurchase program (1)
Share repurchase program (1)
1,752,178  $143.25  1,752,178   
Share repurchase program (1)
2,067,967 $153.93 2,067,967  
Employee transactions (2)
Employee transactions (2)
40,757  $140.58  N/A 
Employee transactions (2)
145,214 $155.28 N/A 
1,792,935   1,752,178    2,213,181  2,067,967  
N/A  Not applicable.
(1) In February 2019, our Board of Directors authorized an expenditure of up to $2.5 billion for the repurchase of our common stock through March 31, 2021. TheIn August 2020, our Board of Directors authorized an expenditure of up to $2.5 billion for the repurchase of our common stock through September 30, 2022.The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means.
(2) Includes restricted shares withheld pursuant to the terms of awards under the Company’s share-based compensation plans to offset tax withholding obligations that occur upon vesting and release of restricted shares. The value of the restricted shares withheld is the closing price of common stock of Ameriprise Financial, Inc. on the date the relevant transaction occurs. Also includes shares withheld pursuant to the net settlement of Non-Qualified Stock Option (“NQSO”) exercises to offset tax withholding obligations that occur upon exercise and to cover the strike price of the NQSO. The value of the shares withheld pursuant to the net settlement of NQSO exercises is the closing price of common stock of Ameriprise Financial, Inc. on the day prior to the date the relevant transaction occurs.
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AMERIPRISE FINANCIAL, INC. 
ITEM 6.  EXHIBITS
Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed certain agreements as exhibits to this Quarterly Report on Form 10-Q. These agreements may contain representations and warranties by the parties. These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent developments, which may not be fully reflected in our public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations and warranties may not describe our actual state of affairs at the date hereof and should not be relied upon.
The following exhibits are filed as part of this Quarterly Report on Form 10-Q. The exhibit numbers followed by an asterisk (*) indicate exhibits electronically filed herewith. All other exhibit numbers indicate exhibits previously filed and are hereby incorporated herein by reference.
ExhibitDescription
3.1
Amended and Restated Certificate of Incorporation of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 1-32525, filed on May 1, 2014).
3.2
Amended and Restated Bylaws of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 1-32525, filed on October 5, 2018).
4.1
Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 3 to Form 10 Registration Statement, File No. 1-32525, filed on August 19, 2005).

Other instruments defining the rights of holders of long-term debt securities of the registrant are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The registrant agrees to furnish copies of these instruments to the SEC upon request.
31.1*
Certification of James M. Cracchiolo pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2*
Certification of Walter S. Berman pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32*
Certification of James M. Cracchiolo and Walter S. Berman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101The following materials from Ameriprise Financial, Inc.’s Quarterly Report on Form 10-Q for the period ended JuneSeptember 30, 2020 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the three months and sixnine months ended JuneSeptember 30, 2020 and 2019; (ii) Consolidated Statements of Comprehensive Income for the three months and sixnine months ended JuneSeptember 30, 2020 and 2019; (iii) Consolidated Balance Sheets at JuneSeptember 30, 2020 and December 31, 2019; (iv) Consolidated Statements of Equity for the three months and sixnine months ended JuneSeptember 30, 2020 and 2019; (v) Consolidated Statements of Cash Flows for the sixnine months ended JuneSeptember 30, 2020 and 2019; and (vi) Notes to the Consolidated Financial Statements.
104The cover page from Ameriprise Financial, Inc.’s Quarterly Report on Form 10-Q for the period ended JuneSeptember 30, 2020 is formatted in iXBRL and contained in Exhibit 101.
* Filed electronically herewithin.



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AMERIPRISE FINANCIAL, INC. 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
AMERIPRISE FINANCIAL, INC.
(Registrant)

Date:August 10,November 9, 2020By:/s/ Walter S. Berman
Walter S. Berman
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Date:August 10,November 9, 2020By:/s/ John R. Hutt
John R. Hutt
Senior Vice President – Corporate Finance and Controller
(Principal Accounting Officer)

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